How did we come up with these salaries?
For the results presented on these pages, and incorporating the information discussed below, HSH.com calculated the income required to cover the mortgage's principal, interest, tax and insurance payment. We used standard 28 percent "front-end" debt ratios and a 20 percent down payment subtracted from the median-home-price data to arrive at our figures. Loans with less than a 20 percent down payment will incur mortgage insurance which would in turn increase the required salary figure.
We utilized the NAR's 2014 first-quarter data for median home prices as well as our 2014 first-quarter average interest rate for a 30-year, fixed-rate mortgages to determine how much money homebuyers in 27 major metro areas would need to earn in order to purchase the median-priced home in their market.
The average mortgage rate information we utilized was for purchase-money mortgages made to borrowers with good to excellent credit.
We created metropolitan-area average property tax information from data made available from the Tax Foundation (http://www.taxfoundation.org), a non-partisan research think tank, based in Washington, D.C.
We utilized statewide average homeowner insurance premium costs made available by the Insurance Information Institute (http://www.iii.org), whose mission is to improve public understanding of insurance – what it does and how it works.
Note: Property taxes and insurance costs are specific to an individual property itself and will be different for any single property in which you may have an interest. Also, if other personal debts exceed 8 percent of a given monthly gross income, this will increase the salary needed to qualify.
Data for the Pittsburgh metro area was provided by RealSTATs (http://www.realstats.net/index.php), a locally owned and operated real estate information company. Home-price data for Detroit was provided by Realcomp II Ltd. (http://realcomp.moveinmichigan.com/), Michigan's largest Multiple Listing Service.