By Skylar Olsen | Zillow
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Qualifying for a loan to buy a $303,000 home – without violating 43 percent debt-to-income ratio rules – would require a minimum estimated annual income of $45,360. Almost 60 percent of U.S. households earn that much.
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Roughly 68.8 million households theoretically earn enough to purchase a $300,000 home. That number drops by just 3 percent assuming they’re looking to buy a $320,000 home.
Almost 60 percent of U.S. households earn enough money to theoretically buy a typical, newly constructed home priced at about $300,000 – and raising the price doesn’t thin the herd of potential buyers as much as may be expected, thanks in large part to very low mortgage interest rates.
Many buyers may be willing to stretch their budget a bit to buy their dream home, but the bank will only let them stretch so far – most lenders will not and cannot allow borrowers to take out a conventional loan that would cause their debt-to-income ratio to exceed 43 percent. In other words, if you have monthly income of $1,000, lenders will not allow you to take out a loan that would cause the portion of your expenses consumed by debt alone – car payment, credit cards, mortgage etc. – to exceed $430.
Zillow explored the impact of higher home prices on the number of Americans who could theoretically obtain a qualified mortgage, assuming the 43 percent debt-to-income ratio alone.
