The Income Needed to Afford Home Payments in 15 Cities

Couple with house key
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Housing costs eat up more of the average American’s salary each month than any other single expense, reaching about one-third of average expenditures in 2019, according to data from the U.S. Bureau of Labor Statistics. And while homeownership is coded into the DNA of the American dream, buying a home isn’t easy for many. Car payments, student loans, credit card bills and other debts can make it difficult to qualify for a home loan and keep up with mortgage payments. That’s why SmartAsset analyzed data from the 15 biggest U.S. cities to estimate how much money you will need to make — and not exceed the recommended 36% debt-to-income ratio — to afford monthly home payments.

Our study compares these cities using the following factors: median home value, property tax rate, down payment, homeowners insurance and other monthly non-mortgage debt payments. For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.

This is SmartAsset’s fourth study on the salary needed to afford home payments in the 15 largest U.S. cities. Check out the 2020 version of the study here.

1. San Jose, CA

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Homeowners in San Jose, California, need to have the highest income out of all 15 cities to afford their home payments. Our study shows that they have to earn $143,233 (with no debt) to afford a property with a median home value of $999,900. That income goes up to $159,900 when a homeowner has $500 in monthly debt payments, $168,233 if he or she owes $750 a month and $176,657 with $1,000 of additional monthly debt. On a more affordable note, the property tax rate in San Jose is relatively low, at 0.76%.

2. New York City, NY

New York City homes neighborhood
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The Big Apple comes in second, but if you want to buy a home in New York City, you will need to earn at least $98,867 with no additional debt to afford house payments. If you owe $1,000 in monthly debt payments, you will need a salary of $132,200. The median home value in NYC is $680,800, and the median real estate tax bill is $5,633.

3. Los Angeles, CA

Los Angeles neighborhood.
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Los Angeles’ median home value is slightly higher than New York City’s and the second-highest in the study ($697,200). The property tax rate, however, is the second-lowest overall – at just 0.68%. If you have no debt, you’ll need to earn at least $98,333 to make home payments and keep your debt-to-income ratio less than 36%. But if you owe $500 each month, you’ll need an income of at least $115,000.

4. San Diego, CA

San Diego home
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San Diego, California’s median home value is $658,400, fourth-highest in the study. The average property tax rate, however, is third-lowest at 0.69%. If you have monthly debt payments of $1,000 before you take out a mortgage, you’ll need to earn at least $126,367 to afford house payments in San Diego. By comparison, if you have a monthly debt of $750, you will need to make $118,033.

5. Austin, TX

Row houses in Austin, Texas
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Austin, Texas, homeowners without debt must earn a minimum of $64,600 to make their housing payments. Their income requirement rises to $81,267 if they have a monthly debt payment of $500. The median home value in Austin is significantly lower when compared with the top four cities on this list, at just $378,300. But the property tax rate is more than twice as high, at 1.75%.

6. Chicago, IL

Chicago row houses at sunset
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The median home value in the Windy City is $275,200. Chicago homeowners have to pay a fairly high property tax rate, at 1.54%. If they do not have any monthly debts, they’ll need to earn at least $45,400 to afford monthly home payments without exceeding the 36% debt-to-income ratio. If they owe $1,000 in debt payments outside their mortgage, they’ll need to earn $78,733.

7. Dallas, TX

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Dallas has the fifth-highest property tax rate in this study, at 1.66%. The median home value in the city is $231,400. Homeowners without debt must earn at least $38,933. But if they owe $750 in monthly debt, they’ll need to make at least $63,933 to afford a mortgage.

8. Charlotte, NC

Home surrounded by greenery in Charlotte,NC.
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Charlotte, North Carolina, has a median home value of $252,100 and a property tax rate of 0.94%. Homeowners here must earn $37,367 without any additional debt to afford housing payments. If you owe $500 in monthly debt payments outside your mortgage, you’ll need to make at least $54,033 for your housing payments.

9. Fort Worth, TX

Fort Worth Texas
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The property tax rate in Fort Worth is 1.98%, the highest rate across all 15 cities. The median home value is $209,400, and homeowners with additional monthly debt payments of $750 need to make $62,100 to live comfortably in this city. By comparison, if their non-mortgage debt obligation is only $500 each month, they will need to earn $53,767.

10. Phoenix, AZ

Aerial view of Phoenix, Arizona
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The property tax rate in Phoenix, Arizona, is 0.58%, the lowest in this study. The median home value is $266,600. Homeowners can afford making mortgage payments with an income of $36,867 as long as they have no other debt. But if they have $750 in monthly debt payments, they’ll need to earn at least $61,867.

11. Houston, TX

Houston homes neighborhood
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Houston’s property tax rate, like in the other Texas cities in the top 15, is fairly high — third-highest in the study, in fact — at 1.78%. The median home value, though, is much lower on the list, at $195,800. To afford the home payments without breaking the 36% debt-to-income rule, you’ll need to earn at least $50,267 if you have $500 in other monthly debt. If you’ve managed to stay debt-free before the mortgage, you’ll only need $33,600 in annual income.

12. San Antonio, TX

San Antonio, Texas outdoors
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The median property tax rate in San Antonio, Texas, is 1.91%, the second-highest property tax rate in the study. The median home value is $171,100. To afford payments on the median San Antonio home, you’ll need to earn at least $29,967 and have no additional debt payments. If you owe a monthly debt of $1,000 outside your mortgage, you’ll need to earn at least $63,300 to afford home payments comfortably.

13. Jacksonville, FL

Jacksonville homes neighborhood
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Jacksonville, Florida’s median home value is $200,200, and the property tax rate is relatively low at 0.87%. This means that you’ll need to make $29,300 to afford an average house payment as long as you have no additional monthly debt. If you are making other debt payments of $500 each month, you’ll need to earn at least $45,967 to afford home payments in Jacksonville comfortably.

14. Columbus, OH

Columbus, Ohio
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Columbus, Ohio’s property tax rate is 1.60%, and the median home value is $173,300. Homeowners with additional debt payments of $500 each month must earn at least $45,533. Doubling those monthly non-mortgage debt payments to $1,000 means that they’ll need a salary of at least $62,200.

15. Philadelphia, PA

Philadelphia neighborhood homes
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The median home value in the city of Brotherly Love is $183,200, and the property tax rate is 0.91%. If you have no other debt, you’ll need a salary of at least $27,000 to make home payments in Philadelphia, Pennsylvania. If you owe $750 in monthly debt payments outside your mortgage, you will have to earn a minimum of $52,000 per year.

Data and Methodology

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To find the minimum required salary to afford home payments in the 15 largest U.S. cities, we used data from the U.S. Census Bureau. First, we took the median home value in each city and calculated the cost of a 20% down payment. We then used the average real estate taxes paid in each city and the median home value to find the average property tax rate. Using those figures and our mortgage calculator, we found the average monthly home payment in each city assuming a homebuyer would get a 30-year mortgage with a 3% interest rate for 80% of the home value (the balance after paying a 20% down payment). We also factored in an annual homeowners insurance payment of 0.35%.

After finding the average monthly home payment, we calculated the income needed to make those payments while not exceeding a 36% debt-to-income ratio. We also considered the necessary income to make home payments based on prospective homebuyer debt levels, which ranged from no monthly debt payments to debt payments totaling $1,000 per month.

We ranked each city from the highest minimum income (with no additional debt) needed to afford home payments to the lowest minimum income (with no additional debt) needed. Median home values and median household incomes are from the U.S. Census Bureau’s 2019 1-year American Community Survey.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


Five of Jacksonville’s Best at Selling Single-Family Homes

Last month we took a look at top Memphis real estate agents through the data-driven lens of HomeLight, the leading referral company powered by proptech. Today, we look at Jacksonville, Fla. through the same lens in order to create a lineup of trusted and effective agents for buying a home there. For this list, I applied with HomeLight to see the best agents for single-family homes, within a certain price range, and for a permanent residence. Here’s the list in order of ranking. 

Jacksonville skyline
The Jacksonville skyline via Pixabay

Sarah Rocco of the Rocco Group and Keeler Williams has only been in the business a few years, but she’s already closed over 422 deals in the Jacksonville area. Sarah attributes her success to her vast marketing experience and advertising strategies, along with her extensive contact list. Sarah ranks in the top 5% of agents on HomeLight in several categories, and 

Rocco Group also maintains a well-situated Facebook profile with 2,416 followers. She’s also an Elite Agent on HomeLight, which means she is in the top 1% of all agents. 

CC Underwood is an agent with Keller Williams Jacksonville Realty who sells houses like cotton candy at the county fair. According to her HomeLight profile, she has 665 single-family home transactions in her 13 years as an agent. The average price point of her transactions is also high at $241k, and her team maintains a killer Facebook profile (7,000 plus fans), even though I could not find the button on their website. It’s also rumored that she can dance, and there’s evidence of this on the Facebook pages. 

Shawn O’Neil ranks 3rd in HomeLight’s list of top Jacksonville agents. He has sold over 100 homes in the area, but his forte seems to be advising. Shawn is something of a TV celebrity, on top of being an author. He’s also a certified expert with the National Association of Expert Advisors. Strangely, his 15 years of experience have not helped Shawn to build a credible online presence. He’s associated with any number of the worst real estate websites I’ve seen in years. As for Facebook and other social media, I found it a bit tough to even connect Shawn with a profile (which is a real no-no for me). I am assuming the one by @ExpertHomeAdvisors is his, or that he is affiliated with the owners. 

Fourth on the list is Tobin Bossola of Coldwell Banker Vanguard Realty. He has 168 transactions in Jacksonville in his 14 years in the business, and the average price of his sales is $173k. Tobin maintains a very nice Facebook profile, but unfortunately, hardly anybody subscribes to his cool shares. He seems to favor LinkedIn as a social-business platform. Tobin has also been featured on Home & Garden TV.

Christopher Ray, who is an agent for eXp Realty, has 264 single-family home transactions in his 8 years in real estate. The average price of Christopher’s transactions is $201k, and he sells 99% of his listings according to HomeLight. Like Shawn O’Neil above, his web presence is not exactly stunning. eXp’s website has some security or load issues, and this Florida Coastal Team one (top of Google SERPs) is just blurry and ugly. Apparently, people looking for houses in Jacksonville do not use the internet, let alone Facebook. Sorry, it had to be said. 

Today’s Takeaway

I just want to share something with the Jacksonville agents who I am sure could sell a lot more by using the internet and social media properly. This blog post by Brent Barnhart for sproutsocial has some good insights for beginners. And for those who do not know anything at all about social tools, this Forbes post might also be of help. Look, digital marketing costs resources, but here’s the thing. It’s all about ROI. Take the case of the five agents listed above. Which ones do you think have the best chance of selling me a house in Jacksonville? Now, how many people are there like me, people who use the internet and social hours each day?

I hope I helped somebody. To be continued….