Miami-Dade County

Want to buy a home in Miami? Here’s the math on salary requirements

View of downtown Miami's skyline.
View of downtown Miami's skyline. pportal@miamiherald.com

If you’ve crunched the numbers and figured the results was not enough to buy a house or apartment in Miami, you’re probably right.

According to HSH.com, a mortgage research site, prospective homebuyers in Miami need to earn an annual salary of more than $80,000.

The data is based on information provided by the National Association of Realtors, which analyzed real estate market behavior in the last quarter of 2017. The median home price in Miami is $335,000, compared to $247,800 nationwide.

And if homebuyers in Miami were to put 10 percent down instead of 20 percent for a home valued at about $330,000, the required salary increases to $82,769.61

The median income in Miami-Dade: $51,800.

The percentage of the salary that should go toward mortgage payments depends on other acquired debts and personal finances, but the recommendation from loan industry experts is that no more than 28 percent of the annual income should be devoted to monthly payments.

So here is a hypothetical breakdown: if your family income is $80,000 per year, the mortgage payment should be approximately $1,860.

The calculation of the monthly mortgage payment is the sum of the principal (the amount you borrowed and must pay at a certain interest), the interest (the lender’s charges for the loan), the property tax and homeowner’s insurance.

As for wages, the Federal Reserve Bank of Atlanta said that the national annual salary had grown by 2.9 percent for December 2017. This percentage increase was enough to keep pace with the wage increase needed to buy in five of the 50 most expensive real estate markets in the country. Buyers in the remaining 45 markets lost purchasing power.

But if the Miami figures scare you, think about what the residents of San Jose, California, need to earn to buy a home at the average price of nearly $1.3 million, with a 10 percent down payment. The required annual salary in that city: $278,971.09. This represents a monthly mortgage payment of $5,498.41.

In San Francisco, the median home price is $920,000; salary requirement is $209,272.69; and monthly payments come to $4,109.50. In San Diego, the breakdown is $610,000; $139,563.41 and $2,743.82, respectively.

So where are homes more affordable?

In Orlando, you can earn $63,345.23 to acquire a property that sells for $250,000. And if you’re willing to live in Pittsburgh, you need only earn $37,960.57 to purchase a $135,000 house.

Follow Sarah Moreno on Twitter: @SarahMorenoENH

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