Homebuyers looking for an affordable mortgage should cast their eyes towards the Steel City — and not the Golden State.
A study from HSH.com sought out the most and least expensive metro areas in the United States, based on mortgage payments for a median-priced home. HSH.com calculated the data using second-quarter data from the National Association of Realtors and mortgage rates from Freddie Mac and Fannie Mae.
Using a standard 28 percent front-end debt ratio and 20 percent down payment, HSH.com discovered the most affordable of the 50 biggest metros in the United States is Pittsburgh. To qualify for a mortgage to buy a $175,000 home, one would need a salary of $38,274, resulting in a monthly payment of just over $893.
Ranking second in affordability is Oklahoma City ($41,739 income required), followed by Cleveland ($44,089), Louisville ($44,314) and Memphis ($47,272). The cities rounding out the 10 least expensive are Indianapolis, St. Louis, Buffalo, Birmingham and Cincinnati. None demand an income greater than $50,000 to afford a mortgage on a median-price home.
On the other end of the spectrum lies California. San Jose ranked worst among the 50 major metros, with a $286,702 salary needed to support $6,689 monthly mortgage payments on a $1.7 million median-priced home. Houses are expensive there because supply is tightly limited by local zoning and buyers with high salaries from tech companies compete for it.
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California cities take the next three spots on the most expensive list as well, with San Francisco coming in second ($237,665 income required), San Diego third ($147,434) and Los Angeles fourth ($130,920). In the top three cities, the 30-year fixed mortgage rate, 3.38 percent, is higher than the national average.
The 10 most expensive metros are rounded out by Seattle, Boston, New York (where a $118,042 salary is needed to support $2,754 payments on a $564,100 home), Denver, Washington and Austin.
Miami and Chicago are in the middle of the pack. In Miami, an income of $88,526 is required to make $2,065 payments on a $485,000 home. In Chicago, an income of $74,628 is needed for $1,741 payments on a $348,600 house.
In the United States, the median home price last quarter was $357,900. A salary of $68,032 would be needed to make the $1,587 monthly payment.