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Summary: The median price of homes in the Seattle metro area has gone up over the years, though they have slowed down over the past 12 months. But exactly what type of income do you need to be able to afford a home in this area? This article will outline more details surrounding this topic.
It’s no secret that buying a home is expensive, especially in Seattle where home prices have notoriously been some of the highest in Washington State and the country. Considering this, it makes sense that a relatively high income would be required to be able to afford the mortgage payments needed to support a home purchase in Seattle.
But exactly how much income do you need to buy a home in the Seattle, Washington area? What are the minimum income requirements for getting a mortgage loan in Seattle? These are common questions among homebuyers, and new data sheds some light on them.
Income Needed to Buy a Home in the Seattle Area, 2020
According to a new report from HSH.com, home buyers in the Seattle metro area need a salary of $106,618 to afford the principal, interest, taxes and insurance payments on a median-priced home in the area.
Related: How much house can I afford?
Here are the figures used for this analysis:
- Down payment of 20%
- A 30-year, fixed-rate mortgage
- Standard 28% debt-to-income ratio (DTI) for buyers
As mentioned, this calculation is based on a down payment of 20%. For borrowers who put 10% down, the required salary would obviously increase. Further, mortgage rates are always fluctuating. So if the rate increases or decreases, the salary needed would subsequently increase and decrease
Bear in mind, this is a look at the income needed to buy a home in the Seattle metro area, which varies a lot in terms of home prices. In the Seattle metro area, for example, the median home price is $521,300 as of February 2020. But there are more affordable cities in the metro area, where the median home value is roughly half of Seattle’s. For example, the median home price in Tacoma is $337,900. So you have to take these figures with a grain of salt.
Sample Mortgage Payment
To give you an idea of how much you would be paying in monthly mortgage payments, let’s assume the average home price in the Seattle Metro Area of $521,300, a 20% down payment ($104,260), and the current 30-year fixed-rate mortgage rate of 3.45%.
Using these numbers, your mortgage payments would be $1,855 per month. Alternatively, if you put down a 10% down payment ($52,130), your monthly payments would be $2,087.
A Better Way to Determine Salary Requirements for a Mortgage
There’s a better way to determine how much salary/income you’d need to get a mortgage loan in the Seattle area. Call us!
Sammamish Mortgage has been helping home buyers in the Seattle area, and across the Pacific Northwest, for more than 20 years. We can evaluate your current debt and income situation to see if you’re a good candidate for a mortgage loan, and how much you can borrow.
In the HSH analysis above, they determined how much income was needed to buy a home in the Seattle area using medians and averages. This might offer a ballpark estimate of the salary needed to afford a mortgage. But your situation might be vastly different from the “median” and “average” figures used in this calculation.
That’s why it’s important to speak with a knowledgeable mortgage professional, who can help you evaluate your specific financial situation and needs.
The debt-to-income ratio is an important factor here. As its name suggests, this ratio (percentage) compares the amount of money a person earns each month to the amount spent on recurring debts. The DTI ratio helps lenders ensure that borrowers aren’t taking on too much debt, with the addition of a home loan. It’s a financial safeguard designed to protect borrowers and lenders alike.
Need a Home Loan in Seattle?
Will you need mortgage financing to buy a home in Seattle some time soon? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest for more than 28 years. We offer a wide variety of mortgage programs with flexible qualification criteria. Please contact us today with any financing-related questions you have.