Summary: Thinking of buying a home in Seattle some time this year or next? How much can you actually afford in a home purchase? Read on to find out how much it will cost you to buy a home in Seattle in 2019 and 2020.
How much house can I afford to buy in Seattle in 2019/2020, when using a mortgage loan?
With over three months left in the year, this is a common question among home buyers planning to enter the market soon. Here’s an updated look at housing market conditions and other factors that will help you answer this important question: How much house can you afford in Seattle?
Seattle Home Price Trends as of Fall 2019
It’s an understatement to say that home prices in Seattle have been on the rise over the past few years. They’re certainly some of the highest home prices in the entire state, and even the entire country.
But as of the end of the summer and early fall of 2019, prices of homes in Seattle have actually dipped. The market has cooled over the past 12 months, and prices are lower today than they were the same time last year.
That said, the median value of a home in Seattle is still a staggering $714,100, which is more than three times the national average. And this will have a direct influence on how much house you can afford in Seattle, if you buy in 2019 or 2020.
You Could Afford More House in a Surrounding Suburb
Home buyers who are willing to expand their searches to include surrounding areas could afford to buy more home. And this becomes obvious when you look at the median home values presented above.
The median price for Seattle property is well above $700,000. But when you look at nearby neighborhoods, the prices are less than half. For instance, prices in nearby Kent, Tacoma, and Federal Way are currently at $387,000, $314,000, and $366,300, respectively (as of September 2019). Keep this in mind when trying to determine how much house you can afford in Seattle. Broadening your search could get you more house.
Budget First, House Hunting Second
If you’re going to use a mortgage loan to buy a house in Seattle, it’s a good idea to put a basic budget on paper first. This will help you narrow your housing search to the kinds of properties you can actually afford, based on your monthly housing budget.
It doesn’t have to be anything complex. You just want to know how much money you have left over each month after covering all of your recurring debts and expenses. That’s the starting point for determining your housing budget.
Getting pre-approved for a mortgage loan can also help you determine how much house you can afford to buy in Seattle. And this is an area where we can assist you. We can review your current financial situation — including income and debts — to determine how much of a loan you might be able to take on.
Understanding Debt-to-Income Ratios
Banks and mortgage companies use something known as the debt-to-income ratio (DTI) to determine how much a person can borrow for a home loan. This is another factor that can affect how much of a house you’re able to buy in Seattle during 2019 and 2020.
As the name suggests, a debt-to-income ratio is simply a comparison between the amount of money you spend each month on your recurring debts, and the amount you earn in the form of income. DTI limits can vary from one mortgage loan program to the next. Generally speaking, however, most home loans have a limit somewhere around 45% to 50% for the total debt-to-income ratio. But it varies.