Many would-be homebuyers were hopeful that the 澳洲幸运5官方开奖结果体彩网:Federal Reserve's rate cuts would bring down int💛erest r꧅ates. So far, this hasn’t played out. 

Interest rates remain high at an average of 澳洲幸运5官方开奖结果体彩网:6.88%—t𒁃he highest rate we’ve seen since July. Housing prices also continue to rise, though at a more reasonable rate than we saw in 2021 and 2022.

The real estate landscape across the United States is extremely varied. The national average price for a single-family home is $359,892, but the average price in each state can be wildly different. For instance, homebuyers in Kansas can expect to pay an average of $228,299, which is a fraction of what they would pay in more expensive states like New Jersey or California, where the average home prices are $535,982 and $773,239, respectively. In these states, it's not uncommon to have a mortgage payment of $4,000 or more. 

This prices the average U.S. family out of the housing mꦚarket in high-cost areas. This begs the question: How much would you have to make to comfortably afford a $4,000 mortgage payment?

You Need a Monthly Income of $14,285 to Af﷽ford a $4𓆉,000 Mortgage

To determine the income you need to afford a $4,000 mortgage, you can use a rule of thumb known as the 澳洲幸运5官方开奖结果体彩网:28/36 rule, which says your mortgage payment should be no more than 28% of your gross—or pre-tax—monthly income. What you pay toward your mortgage, credit cards, and other debts should be no more than 36%. Lenders can adjust these limits for borr🔯owers with high credit scores and sufficient reserves, 🎐but the 28/36 rule is widely accepted as the standard for your mortgage and debt levels. 

Using the 28/36 rule, we can determine that a homebuyer would need at least $14,285.72 in monthly income to afford a $4,000 mortgage payment ($14,285.72 x 0.28 = $4,000). Note that the 28% should ideally include all housing-related expenses, such as the mortgage payment, property taxes, homeowners insurance, and, if needed, 澳洲幸运5官方开奖结果体彩网:private mortgage insurance (PMI)—which is gene🥀rally required if you put down less than 20% of your home’s purchase price. 

From here, we can use a 澳洲幸运5官方开奖结果体彩网:mortgage calculator to figure out what’s on eve💦ry borrower's mind: How much house can I afford? 

Let’s take an average single-family home in Massachusetts as an example. The average home price is $627,696, according to Zillow. Assuming the buyer makes a 20% 澳洲幸运5官方开奖结果体彩网:down payment of $125,523 and gets a mortgage rate of 6.88%, the monthly principal-and-interest mortgage payment translates to $3,299.94. Once you add estimated monthly payments of $596 in property taxes and $183 in 澳洲幸运5官方开奖结果体彩网:homeowners insurance, the total monthly mortgage payment co♛mes to $4,079.19.

How to Lower Your Mortgage Payment

Even if your monthl🐲y housing cost will likely be less than the $4,000 mortgage payment that is average for specific areas, there are ways 🦩to impact that number.

Look for Assistance Programs

Brandon Norwood, owner and licensed financial planner for Oak City Financial, notes that even in areas with pricey real estate, there are offerings to help 澳洲幸运5官方开奖结果体彩网:first-time homebuyers.

“Explore state, local, or lender programs offering down payment assistance, reduced PMI, or low♍er-int🦂erest loans,” Norwood said.

Shop Around for Rates

Homebuyers should 澳洲幸运5官方开奖结果体彩网:compare mortgage lenౠders to find the best deal. Get at least three estimates and see if each lender can♚ beat the rates and terms of the others.

Consider Smaller Homes and Fixer-Uppers

Homes of a less-than-average size or a lower-than-average condition will command aꦛ smaller-than-average home price and thus a smaller mortgage. Find a livable home that meets your needs, and you can upgrade la💃ter.

Rent a Portion of the Property

You can buy a multi-unit property (such as a duplex) and rent out the units you don’t live in, you can purchase a property that contains an additional house or apartment and rent out the 澳洲幸运5官方开奖结果体彩网:accessory dwelling unit (ADU), or yo🍎u could even rent out unused storage space to increase yไour income. The additional income from these strategies could put toward your monthly mortgage payment to help you pay down the loan faster.

Make Sure You're Ready to Commit to a Mortgage

The main thing to avoid before committing to a 30-year mortgage is becoming “澳洲幸运5官方开奖结果体彩网:house poor.” This term refers to a homeowner who𓆉 has little money for other things because their housing costs represent so much of their monthly income. For many h♔omebuyers right now, the high costs of living and high mortgage rates could mean taking on a bigger loan than they’d actually be comfortable with.

For those unsu꧒re if they can handle a mortgage at all, take one for a test drive first.

“Before committing to a mortgage, try setting aside the estimated mortgage payment for a few m𒊎onths,” Norwood said. “If you find it challenging to meet other financial needs, consider a ♔lower mortgage amount.”

How We Track Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a 澳洲幸运5官方开奖结果体彩网:loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from🗹 advertised teaser rates. © Zillow, Inc., 2024. Use is subject to the Zi꧑llow Terms of Use.