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.
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.