This is exactly the income that homebuyers bring to the negotiating table
This is exactly the income that homebuyers bring to the negotiating table

How much income do homebuyers typically come to the table with?

Getty Images/iStockphoto

The median U.S. household income is around $68,000, according to for the Census Bureau – but that may not be enough to help you buy a home these days. Indeed, even if average mortgage rates are still below 5% (see the lowest mortgage rates you can qualify for here) at the moment (note that the pros expect them to rise), many recent buyers had six-figure incomes, according to the National Association of Realtors Research Group’s 2022 Home Buyers and Sellers Generational Trends report, which surveyed 5,795 recent primary residence homebuyers.

Half of shoppers had household incomes of at least $100,000, the survey found, while nearly 7 in 10 earned more than $75,000, the survey found. (Note that NAR also reports that “for households earning $75,000 to $100,000, there is an affordable list available for 65 households – a sharp decrease in the availability of an affordable list for 24 households in 2019 for this group income.”). And the median income of homebuyers increased between 2019 and 2020, from $96,500 to $102,000 respectively. “We’ve consistently seen median income increase from previous years, and we could see that continue,” says Brandi Snowden, NAR’s director for member and consumer surveys.

Household income of homebuyers

Income bracket

Percentage of buyers

Less than $25,000

2%

$25,000 – $34,999

3%

$35,000 – $44,999

5%

$45,000 – $54,999

7%

$55,000 – $64,999

7%

$65,000 – $74,999

7%

$75,000 – $84,999

8%

$85,000 – $99,999

ten%

$100,000 – $124,999

14%

$125,000 – $149,999

ten%

$150,000 – $174,999

8%

$175,000 – $199,999

5%

$200,000 or more

13%

Source: National Association of Realtors Research Group

Other research places the share of homebuyers with household incomes of $100,000 and above slightly lower, but still high. 2021 search for Zillow found that 43% of homebuyers had an annual household income of $100,000 or more, with the median household income among homebuyers reaching around $86,000. More than three-quarters of buyers in this survey had household incomes over $50,000.

Plus, the amount you’ll need to save for a down payment has also increased. According to data from real estate data firm ATTOM Data Solutions, the median down payment on single-family homes purchased with financing in Q4 2021 was $26,000, up 18.8% from Q4 2020.

For those who follow the housing market, these numbers may come as no surprise: Home prices rose 14.6% in 2021 to $361,700, according to the NAR, and so income may be needed. higher to access the property ladder. “Homebuyer affordability has declined due to rapidly rising mortgage rates amid strong house price growth,” said Edward Seiler, associate vice president of housing economics at Mortgage Bankers. Association, in a press release. And in fact Data from MBA found that the national median mortgage payment requested by those hoping to get a mortgage was $1,653 in February, compared to $1,526 in January, $1,383 in December 2021 and $1,316 in February 2021. (Find the lowest mortgage rates you can afford here.)

You may be looking at your income and wondering how much you can afford to spend on a home. Be aware that this is not just an income or down payment calculation. In fact, according to research from NerdWallet, the number one reason people are turned down for a mortgage is their debt-to-income ratio (DTI), which compares how much you owe each month to how much you earn. The ideal DTI is 36% or less and can be counted by adding your monthly payments like mortgage, student loans, credit card payments and other debts and dividing this number by your gross monthly income.

LEAVE A REPLY

Please enter your comment!
Please enter your name here