This gives them a percentage called a debt-to-income ratio (DTI).įederal loan approval regs allow for all mortgages of this size to have DTI up to 43%, therefore the above calculations showing income needed to qualify are predicated on 43% DTI. Lenders divide your total monthly proposed housing and non-housing debt by your gross income. HOME AFFORDABILITY MATH 2023Ībove I’m using calculations lenders use to approve loans in America. – If you had $600 in credit card, auto, and other monthly debt, you’d need to make $99.7k* per year to qualify. – If you had no other monthly debt, you’d need to make $83k* per year to qualify for this. – Monthly cost on a $405,000 home purchase with $50,000 down and today’s 6.625% rate is $2975 (mortgage payment, insurance, taxes, mortgage insurance). – Redfin notes the typical primary residence purchased in 2022 by someone age 45-54 cost $405,000 and had a $50,000 down payment. – If you had $600 in credit card, auto, and other monthly debt, you’d need to make $94k* per year to qualify. – If you had no other monthly debt, you’d need to make $77k* per year to qualify for this. – Monthly cost on a $355,000 home purchase with $30,000 down and today’s 6.625% rate is $2762 (mortgage payment, insurance, taxes, mortgage insurance). – Redfin notes the typical primary residence purchased in 2022 by someone age 25-34 cost $355,000 and had a $30,000 down payment. MILLENNIAL HOMEOWNERSHIP AFFORDABILITY 2023 – If you had $600 in credit card, auto, and other monthly debt, you’d need to make $72k* per year to qualify. – If you had no other monthly debt, you’d need to make $55k* per year to qualify for this. – Monthly cost on a $235,000 home purchase with $10,000 down and today’s 6.625% rate is $1974 (mortgage payment, insurance, taxes, mortgage insurance). Redfin notes the typical primary residence purchased in 2022 by someone under 25 cost $235,000 and had a $10,000 down payment. This is compared to millennials (28%), Gen X (27%) and boomers (32%) when they were age 25.

Redfin notes (using HMDA data the Federal government collects on all mortgages) that 30% of 25 year olds owned their homes in 2022. Last year, the Gen Z age range was 10 to 25. Below are homeownership percentages by generation, and lender math showing how Gen Z, millennials, and Gen X afford homes in 2023. Dana Anderson and Sheharyar Bokhari at Redfin have some important new analysis showing Gen Z homeownership tracking strongly relative to millennials and Gen X at their age.

Gen x age range 2022