Income Needed to Buy a House in Portland in 2023

September 6, 2016
Last updated:
June 28, 2023
Post cover image
In This Article

Thinking of buying a home in Portland? If so, do you know how much you can afford to buy? In this article, we’ll discuss the income you need to afford the monthly payments for a mortgage on a home in Portland, OR.

“How much income will I need to buy a home in the Portland area?” This is one of the most frequently asked questions among Portland home buyers, and a new report by the mortgage information site offers some fresh insight.

Among other things, the report showed how much salary home buyers would need to earn in order to afford the principal, interest, taxes and insurance (PITI) payments on a median-priced home. The study looked at several metro areas across the U.S., including Portland.

Income Needed to Buy a Median-Priced Home in Portland

According to the report, Portland home buyers need an income of around $153,094 to afford the mortgage payments associated with a median-priced home in the city.

This assumes a house price of $547,999, which is roughly the midpoint for the Portlincoand real estate market. It also assumes a mortgage rate of 5.875%, a monthly payment of $3,033 and a down payment of 10%. Those are a lot of assumptions, particularly the last one. Many home buyers in the Portland area cannot afford a 20% down payment.

So while these numbers might be useful for comparing one metro area to another, they certainly don’t apply to every home-buying scenario. Let’s look at some other ways to figure out how much income you might need to buy a house in Portland.

Related: Home prices rising steadily in Portland

Debt-to-Income Ratios

As the name suggests, a debt-to-income (DTI) ratio is a comparison between a person’s debts and income. Example: A person with a gross monthly income of $4,000 and total monthly debts of $1,500 would have a DTI ratio of 37.5% (1500 / 4000 = .375, or 37.5%). This is known as the total or “back-end” debt-to-income ratio, because it includes all monthly debts: mortgage payment, credit cards, auto loan, etc.

Generally speaking, Portland mortgage lenders prefer to see a back-end DTI ratio no higher than 43%. But this number is not written in stone. Exceptions are often made for well-qualified borrowers with strong credit histories. The point is, if your back-end DTI ratio is much higher than 43%, you might have a harder time qualifying for a mortgage loan.

So the income needed to buy a home in Portland will partly depend on: (A) the amount of recurring debts you have, and (B) the amount you’re trying to borrow. The debt-to-income ratio takes both of these factors into account.

Getting Pre-Approved by a Mortgage Company

All of the examples above are general in nature. As a Portland home buyer, you need to know how much you can borrow based on your specific financial situation. That’s where mortgage pre-approval comes into the picture.

During the pre-approval process, the mortgage lender will examine your current income, assets and debts to determine how much they’re willing to lend you. Most home buyers get pre-approved before shopping for a home, and with good reason. Sellers will take you more seriously if you have a pre-approval letter from a lender. It also helps you narrow down your home search to the properties you can afford to buy.

How Much Can You Comfortably Afford?

Before talking to lenders or submitting loan applications, you should have a general home-buying budget in mind. You’ll want to determine how much of a monthly mortgage payment you can comfortably afford.

In this context, “comfortably” means that you can cover your mortgage payments and all other recurring expenses, while still having some money left over each month for lifestyle, entertainment, retirement savings, etc.

This is where budgeting comes into the picture. Many financial advisors recommend spending no more than 33% of monthly income on mortgage payments, but this is just a general rule. Most importantly, be sure to keep an emergency fund in the bank, for unexpected outlays like car repairs, medical bills, etc.

Related: 11 Best Neighborhoods in Portland 

Get an Instant Mortgage Rate Quote Today

Have Questions About Mortgages in Portland?

If you have questions about the income needed to buy a home in Portland, or other mortgage-related concerns, get in touch with Sammamish Mortgage. We’ve been helping buyers all across Oregon, Washington, Colorado, and Idaho secure a number of mortgage programs that we offer since 1992. Get in touch with us today to get the mortgage process started!

Other Blogs You May Like
Five Tips That Will Help Speed Up The Mortgage Process
July 2, 2024
3 min read
Five Tips That Will Help Speed Up The Mortgage Process
When a seller accepts an offer from a buyer, the process of obtaining the property has just begun....
Outlook for Buying a Home in WA State in 2024
June 14, 2024
5 min read
Outlook for Buying a Home in WA State in 2024
Home buyers in Washington need to know what's going on in the real estate world so they can make...
Show 248 more posts
from this category

Connect with a Mortgage Advisor Today!

Whether you’re buying a home or ready to refinance, our professionals can help.

Compare Mortgage Rates in Your Area Instantly

No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.

Subscribe to our newsletter