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Where it takes $185K to get a loan

By Polyana da Costa · Bankrate.com
Wednesday, May 14, 2014
Posted: 3 pm ET

More than 65 percent of homes sold in the first three months of the year were affordable to buyers earning the U.S. median income of $63,900, the National Association of Home Builders says in its latest study.

But that's not cheerful news for buyers who earn less than the median. And what about people who live in the most expensive housing markets of the country, and can't afford to buy?

Most expensive place to buy a home

Those who want to buy a typical home in San Jose, California, for example, need to earn more than $186,000 a year to qualify for a mortgage, according to data released this week by the National Association of Realtors. That's more than twice the median household income in San Jose, according to the latest census information available.

The second most expensive metro area to buy a home is San Francisco, where the typical buyer needs to earn more than $156,000 to qualify for a home loan. If you are one of the lucky ones and make big bucks working for one of the many tech companies in Silicon Valley, income may not be an issue when buying a home. But that's not the case for the average buyer in San Jose, San Francisco and other expensive markets.

Least affordable markets for a median-priced home

Metro area Income needed to qualify, putting 5% down
Metro area San Jose-Sunnyvale-Santa Clara, CA Income needed to qualify, putting 5% down $186,285
Metro area San Francisco-Oakland-Fremont, CA Income needed to qualify, putting 5% down $156,728
Metro area Honolulu, HI Income needed to qualify, putting 5% down $154,999
Metro area Anaheim-Santa Ana-Irvine, CA Income needed to qualify, putting 5% down $154,423
Metro area San Diego-Carlsbad-San Marcos, CA Income needed to qualify, putting 5% down $111,356
Metro area New York-Wayne-White Plains, NY-NJ Income needed to qualify, putting 5% down $101,947
Metro area Boulder, CO Income needed to qualify, putting 5% down $96,532
Metro area Los Angeles-Long Beach-Santa Ana, CA Income needed to qualify, putting 5% down $93,650
Metro area New York-Northern New Jersey-Long Island, NY-NJ-PA Income needed to qualify, putting 5% down $89,661
Metro area Nassau-Suffolk, NY Income needed to qualify, putting 5% down $89,408

Source: National Association of Realtors

Your income matters more than the home price

Homebuyers often focus on the mortgage interest rate and the price of the home when shopping, when they should really give more emphasis to what fits their budget, says Douglas Robinson, a spokesman with NeighborWorks America.

"The home price number is important – very important – but it is not the right number for consumers to have top-of-mind," he says. "The right number is what they could afford and qualify."

Most affordable markets for a median-priced home

Metro area Income needed to qualify, putting 5% down
Metro area Youngstown-Warren-Boardman, OH-PA Income needed to qualify, putting 5% down $14,894
Metro area Decatur, IL Income needed to qualify, putting 5% down $16,046
Metro area Toledo, OH Income needed to qualify, putting 5% down $16,623
Metro area Rockford, IL Income needed to qualify, putting 5% down $16,853
Metro area Cumberland, MD-WV Income needed to qualify, putting 5% down $18,767
Metro area South Bend-Mishawaka, IN Income needed to qualify, putting 5% down $19,758
Metro area Dayton, OH Income needed to qualify, putting 5% down $21,649
Metro area Canton-Massillon, OH Income needed to qualify, putting 5% down $21,741
Metro area Fort Wayne, IN Income needed to qualify, putting 5% down $21,787
Metro area Fond du Lac, WI Income needed to qualify, putting 5% down $21,810

Source: National Association of Realtors

Follow me on Twitter @Polyanad.

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