Can You Afford a Home in Chicago?
By Sally Deneen
Can you afford a home in Chicago? The mortgage website HSH.com answers yes – if you have an after-tax income of $32,388.90, making the city the 11th most affordable out of 25 cities rated.
Here's how the website says it made that calculation: It assumes that you purchase a $187,100 home and a 4.47 percent mortgage interest rate to come up with a monthly mortgage payment of $755.74. That covers only the interest and principal, not those real-world extras such as taxes, insurance, down payment and expenses to live in the home.
Cleveland ranks easiest on the wallet in these rankings. You'd need an after-tax income of $19,435 to afford a low monthly mortgage payment – just $453.49. That's for a home that costs $112,800 in Cleveland, HSH.com states, making the Ohio city "the most affordable city on our list once again," thanks to "lower home prices and interest rates [that] dropped the required salary by about $3,000 from the previous quarter." Cincinnati ranks second most affordable, followed by St. Louis and Atlanta.
San Francisco proves costliest among the 25 cities ranked, surpassing San Diego and Los Angeles, thanks to requiring an after-tax income of $115,510 to cover a huge monthly mortgage bill of $2,695. That's on a $682,410 home, according to HSH.
"There is no doubt that your income will need to be much higher, possibly even double or triple this level, to cover the needed taxes, insurances and other expenses to live in the home, plus the down payment and any other debts you might have," states the fine print. "Since those are highly variable, down to even the individual property level and personal choice, there is no adequate way to factor for them."
To estimate a monthly mortgage payment – including taxes and insurance – enter in a mortgage calculator the price of the home, your down payment and details about the home loan. The home, including taxes, maintenance and other costs, shouldn't be greater than 28 percent of your monthly income, advises the Wall Street Journal.