Buyer Tips and AdviceMortgage Knowledge

Can A Family Earning the Median Income Buy a Home in San Diego?

 

Can A Family Earning the Median Income Buy a Home in San Diego?

The short answer=PROBABLY NOT

At least not if the home they are purchasing is priced at the current Median Price. Why?

 

2014 median Income for

San Diego County

     

Median Price for a single family

home in San Diego County as

of April 2014

$75,900 for a family of four   $491,000

(As published by the State of California

Department of Housing and Community Development)

  (As published by SDAR on 5/5/2014)

 

 

Assumptions:  

Credit Score

(To determine Mortgage Insurance cost)

740

Rate

(for illustration purposes-not a rate quote)

4.375%
Down Payment 10%
Monthly Debt $500

First, let’s start off with the down payment. Loans exceeding the conforming limit of $417,000 require 10% down. I think that not many families earning $75,900/ year will have $50,000 available for down payment.  

But let’s assume they do.

What kind of payment would they be looking at?

P&I $2,206.34
MI (est) $254.09
Ins (est) $85.93
Tax (est) $511.46
HOA $0.00
Total Payment $3,057.82

This family would be trying to qualify with ratios of  48.3%/56.3%

Current QM guidelines call for total debt ratio of 43%

So how much income would be needed to qualify for this scenario if 43% is the target?  $99,600

Of course, 43% is just a guideline which can be exceeded should the applicant meet certain requirements.  Regardless, you can see that there is a large gap between the ideal income needed to qualify for a home in San Diego sold at the current median price and the median income in San Diego County.

 

Assumptions:  

Credit Score

(To determine Mortgage Insurance cost)

740

Rate

(for illustration purposes-not a rate quote)

4.375%
Down Payment 5%
Monthly Debt $500

What sales price should this family be searching for assuming the 43% total debt limit?

Approximately $350,000 with 5% down payment

P&I 1,660.12
MI 171.79
Ins $61.25
Tax 364.58
HOA $0.00
Total Payment $2,257.75

   Is This

   A

   Realistic

   Figure?

YES!

Home Roof

 

There are several areas in San Diego County with Median Prices below the County figure.

 

Zip Code City/Area   Zip Code City   Zip Code City/Area
91906 Campo   91945 Lemon Grove   92004 Borrego Springs
91950 National City   91962 Pine Valley   92036 Julian
92102 San Diego   92105 East San Diego   92113 Logan Heights
92114 Encanto   92139 Paradise Hills   92173 San Ysidro

 

 

So despite the fact that The National Association Of Realtors reports the Affordability Index in San Diego as -20.9%, purchasing a home in San Diego is still possible even if you are not part of the higher paid population.

 

So if you are ready to stop renting and become a homeowner, now is the time do jump into the market.

Buy Now

Contact me for a referral to a local Realtor who is an expert in the neighborhood you want to call home.

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