The Affordability Challenge

An $185,000 home requires a 5% cash down payment. 

$ 0

$185,000 – down payment = remainder of mortgage

$ 0

Estimated monthly payment (PITI*):

$1,385 (30-year fixed loan at 4.125% w/ 5% down payment)

*PITI – Monthly payment including principal, interest, homeowner’s insurance and property taxes. 

[Source: Nerdwallet mortgage calculator and Navy Federal Mortgage Loan Calculator] 

$ 0 - Principal & Interest
$ 0 - Property Taxes
$ 0 - Homeowner's Insurance
$ 0 - PMI Insurance (if down payment is less than 20%)
$ 0 Total monthly mortgage costs

Benchmarks for affordability/attainability

The US National Housing Act of 1937 indicates that housing expenses exceeding 30% of household income is defined cost burdened housing.

Gross income required to be able to afford housing (P&I):

  • Housing Costs
  • Other Expenses, Savings
$ 0
P&I Monthly at 25% =
$ 0
Monthly Income
$ 0
Annual Income

Gross income required to be able to afford total housing (PITI):

  • Housing Costs
  • Other Expenses, Savings
$ 0
P&I Monthly at 25% =
$ 0
Monthly Income
$ 0
Annual Income

Conclusion

Annual income required to be able to afford a $185,000 home without being cost burdened (housing costs at 25% of gross income): $40,896 – $66,480.

Median household income in Wayne County: $42,434

Per Capita Income in Wayne County: $23,376 

The current median household income could afford $884 (25%) to $1,060 (30%) in monthly housing costs before they are considered cost burdened.

If the average household barely meets the housing cost requirements (with a 5% down payment of almost $10,000 cash), then more than half of all workforce will not be able to afford a home without being cost burdened

Start typing and press Enter to search