Your salary and debts play a major role in determining what you can afford to buy in Denver.
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The median home price in the Denver metro area is sitting around $360,000, and prices are expected to rise about 3% over the next year following nearly double-digit growth in 2016. Consequently, homeowners are spending more and more of their monthly income to pay the mortgage on their Denver-area dream home.
So how do you know what you can afford in the hot Denver market? Start by looking at your annual salary and debts.
A recent survey shows Denver homebuyers need to make nearly $73,000 annually if you want to put down 20% on your dream home in 2017, or nearly $86,000 if you want to put only 10% down.
These numbers were based on a survey released earlier in March by HSH.com, a mortgage information site. The survey looked at median home prices in 27 U.S. metropolitan areas during the last quarter of 2016—along with the mortgage principal buyers have to pay, interest rates, property taxes, and insurance costs—to determine what salaries people need to make annually to afford to buy a home.
Higher salaries were required to buy homes in:
- San Francisco: $160,589.83
- San Diego: $113,530.43
- Los Angeles: $98,315.22
- New York: $92,664.68
- Boston: $89,299.95
- Seattle: $83,969.34
- Washington, D.C.: $80,230.15
Knowing how much you have to make each year is just the start of knowing what you can afford to pay for a home in Denver. You also need to consider what percentage of your monthly income should be dedicated to your mortgage payment.
Mortgage companies may allow you to spend up to 28% of your monthly income on your house payment. But that’s not always the best rule to follow when it comes to your unique financial situation.
Be sure you crunch some numbers on your own to determine what you’re comfortable paying each month. For instance, the more debt you have, the less you may want to spend on your mortgage—especially if you’re trying to pay more than the minimum payment on your bills each month.
You can try one of the online mortgage calculators to determine what your monthly payment would be based on the home price plus property taxes, homeowner insurance, and PMI if your down payment is less than 10%. To get a more accurate estimate, call your insurance agent for a quote on a new home and look up property tax rates in the city or county you plan to buy in.
Once you have an idea of what you can pay each month, you’ll be able to estimate how much home you can buy in 2017. Happy house hunting!
If you think the timing’s right, contact Top Denver Realtor Cindy Marlowe and her team of real estate experts at Redhead Properties, 303-912-1478.