The minimum income needed to qualify for a typical mortgage on a median-priced home has risen higher than ever. A recent study by Redfin revealed that in August, buyers needed an annual income of $114,627 to qualify for a 30-year fixed-rate mortgage on a median-priced U.S. home (costing $420,000)—roughly $40,000 more than the median national income. That translates to a monthly house payment of $2,866, which is a record high, according to The New York Times.
Homebuyers in the nation’s 100 largest metro areas needed an income of at least $100,000 per year to qualify for a mortgage in half of those metros, and an income of $50,000 wasn’t enough in any of them, the study revealed.
California metros took the top seven spots for required income. The greatest annual increases were in Newark and Miami, where the required income rose by 33 percent; the smallest was in Austin, Texas, about 8 percent. Midwest metros also saw comparatively low increases.
In hot spots of pandemic home demand — Austin, Texas; Boise, Idaho; Salt Lake City, Fort Worth, and Lakeland, Fla., among them — home prices fell during the year. But because of higher interest rates, the qualifying income for mortgage approval rose anyway.
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