How Much Income Do You Need to Buy a House in Florida?
Jun 09, 2024
How Much Income Do You Need to Buy a House in Florida?
Lately, the headlines make buying a home feel impossible.
You've probably seen a chart claiming you need to earn six figures to afford a house. It's enough to make a lot of buyers count themselves out before they even start. 😥
But is that number actually true for you?
Let's slow down and look at the full picture, because affordability is more personal than any headline suggests.
The Short Answer
Here's the figure driving the headlines.
Bankrate estimates you need to earn about $114,771 to afford a median-priced home in Florida. The "median" price is just the middle price, where half of homes cost more and half cost less.
That number is real, but it rests on one strict assumption. Change the assumption and the number moves a lot.
So treat $114,771 as a starting point, not a verdict.
How That "Income Needed" Number Is Calculated
Most affordability charts use the 28/36 rule.
The 28/36 rule is a budgeting guideline. It says you spend no more than 28% of your gross income on housing, and no more than 36% on total debt.
So if you earn $100,000, the rule caps your housing payment at about $2,333 a month. (28% of $100,000 is $28,000 a year, divided by 12.)
Does that feel low to you? A lot of buyers think so.
Here's that same 28% math across a few income levels, housing payment only:
| Yearly income | Max monthly housing payment (28% rule) |
|---|---|
| $75,000 | $1,750 |
| $100,000 | $2,333 |
| $125,000 | $2,917 |
| $150,000 | $3,500 |
One caveat: this is a rule of thumb, not what a lender will actually approve.
What Lenders Actually Approve
Banks usually allow more than the 28% rule suggests. 🏦
On an FHA loan, a government-backed mortgage with flexible requirements, approvals often reach 40% to 55% of your income. That's a wide gap from 28%.
Why does this matter? Because the headline number can understate what you may qualify for.
Why Your Debt Changes Everything
Your current debt may matter more than your salary.
Lenders look at your debt-to-income ratio, or DTI, which compares your monthly debt payments to your monthly income. More debt leaves less room for a mortgage.
In the example below, the income needed to buy the same $350,000 home swings about 90% depending on the buyer's existing monthly debts.
Same house, very different income requirement. That's why one number can't capture your situation.
National Headline vs Your Local Market
Now let's zoom in, because Florida isn't one market.
Median home prices vary widely across the state:
| Florida metro | Median home price |
|---|---|
| Miami | $500,000 |
| Destin | $431,000 |
| Jacksonville | $375,000 |
| Ocala | $279,900 |
A national, or even statewide, average can be misleading for your city. Within each metro you'll also find more and less affordable pockets.
When in doubt, zoom out for context, then go local for the truth.
Bottom Line
Don't count yourself out based on a single headline number.
Affordability depends on your income, your debt, your loan type, and your local prices. A scary chart can't see any of that.
Here's a smart next step for buyers and Realtors. Before you assume a home is out of reach, get personalized numbers for your budget and your zip code.
This could change if rates or prices shift, so revisit the math as the market moves.
The market is always good for someone. With the right information, that someone can be you. 🚀
Dr. Alex Stewart
Founder
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