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The median income in these cities is high, but so are real estate prices. Higher interest rates have increased the cost to borrow, so buyers will need to show significant income to get a mortgage. According to one rule of thumb, you should spend no more than 28% of your pretax income on your housing payment and 36% on all your debts combined.
What's the monthly payment for a $400k house?
The listings on Realtor.com in this price range looked well-kept but could use some updates. In the center of town, you’ll find turn-of-the-century brownstones—and one or two of the one-bedroom listings come with a price tag under $300,000. Bankrate’s home-affordability calculator can help you figure out what salary is needed to afford a $400,000 home. Based on these numbers, your monthly mortgage payment would be around $2,470. Over the past year, the average price per square foot for single-family residential homes in Fremont was $952. The estimated size of a $400,000 home is 420 square feet—barely larger than in San Francisco.
Cities Where $400,000 Goes the Furthest
However, the minimum down payment for a $400K house would be only $2,000 more for those with a score of 580 instead of 620. From your lender’s point of view, a down payment is about your having skin in the game. The bigger your down payment, the more likely you are to keep up your monthly mortgage payments and fight to keep your home if times get tough. Of course, that means the lender’s risk of making a loss on your loan is smaller than it is with less-invested borrowers.
Vintage home on the range: $399,000, 2023 S. Henderson Blvd., Kilgore, TX 75662
The median home value in Fremont, California, is roughly $1.2 million, according to 2021 Census Bureau data. The share of first-time homebuyers dipped to 27% in September, down from 29% in August, according to the Realtors Confidence Index survey. Three more California metros — Anaheim, Oakland and San Diego — round out the top five, requiring interested buyers to earn between $240,000 and $300,000 annually. To put those figures into perspective, the median U.S. household income was $75,000 in 2022, according to the report. Residents can easily drive to Montreal, New York City and Boston within 3.5 hours, or quickly escape to the nearby Finger Lakes wine region and the Berkshires of Massachusetts.
Shop around for a mortgage
Green Bay is home to the Green Bay Packers football team, boasts a thriving entertainment and arts scene, and has two college campuses. There are thousands of down payment assistance programs across the country. And every one is dedicated to providing financial help to home buyers. So, next, let’s explore the pros and cons of different low-down-payment mortgages.
All-cash purchases price out first-time homebuyers
We investigated how much home $400,000 can buy you in the 100 largest U.S. cities. We estimated the size of a $400,000 house using data on the average price per square foot for home sales in these cities from April 2022 through March 2023. We also discuss the median home value and percentage of single-family homes using 2021 data from the Census Bureau. The interest rate on your mortgage will impact your monthly payment, so get an idea of general current mortgage rates while you’re setting a budget. Advertised rates may only apply to extremely qualified borrowers, so it’s a good idea to get a rate quote from a lender.
And you’ll have to sell the home or refinance the mortgage to escape it before you finish paying down this loan type. “It’s important to work with an agent and lender in your local market who can provide clarity on closing costs specific to your market,” McDaniels says. “If you can’t pay for the closing costs, you won’t be able to move forward with purchasing the property." For most buyers, working with a knowledgeable local real estate agent is invaluable.
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Down payment requirements for a $400K house
We sought to find how big of a home you could purchase with $400,000 in the 100 largest U.S. cities. We considered the average price per square foot for homes sold from April 2022 through March 2023 using data from Redfin. Perhaps surprisingly, Los Angeles slightly outperforms Irvine regarding home affordability. However, the average price per square foot for single-family homes in Los Angeles is slightly lower, at $665 (compared to $721).
Kim Porter began her career as a writer and an editor focusing on personal finance in 2010. Since then, her work has been published everywhere from Forbes Advisor to U.S. News & World Report, Fortune, NextAdvisor, Credit Karma, Bankrate, and more.
Today, however, rates are the highest they’ve been since the year 2000—but they may be done climbing. In the first quarter of 2020, the median sale price for a home stood at $329,000. But the emergence of the COVID-19 pandemic in March 2020 brought about a perfect storm of market forces that drove home prices upward. So, if you’re in the market for a house and wondering how much you need to earn to afford one, we’ve got your back.
One of the biggest reasons home prices shot up so much, according to Bergmann, was record-low interest rates, which encouraged more buyers to jump into the homebuying market. That’s a good bit above the national median home price of $363,000, according to the National Association of Realtors. The income needed to comfortably afford such a purchase will depend on a variety of factors, including, crucially, the interest rate of your mortgage.
Fixer-uppers—no matter how old they are—may also sell for a lower price, but they require time and money after the sale. If you choose to buy a fixer-upper and complete the home improvement projects yourself (rather than hiring a professional), the savings may be significant. Buyers may find themselves competing against veteran homeowners who can make cash offers.
However, it’s highly unlikely mortgage rates will drop to 2021 levels, according to Derek Amos, senior mortgage loan originator with Mutual of Omaha Mortgage. Don’t stop monitoring the factors listed above once you go into contract. It can take weeks or even months before your purchase closes, and you don’t want anything to change your finances until the deal is completely done. For example, don’t apply for new credit cards or make purchases that require financing, like a car, because those can affect your credit score. And if possible, don’t switch jobs or make any big life changes, such as getting married, either. In addition, keep in mind that a $400,000 home can look vastly different from one location to another.
Edward Barry is CEO of Capital Bank, a Rockville, Md.-based lender that does business across the country. Last year, Capital Bank had more than $1 billion in mortgage origination business and worked with many first-time home buyers. It's also important to remember that the cost of a home includes more than just a property’s sticker price. In March 2022, mortgage rates were still relatively low, averaging 4.67%.
The average price per square foot in the Golden City is $996 for all homes and $1,019 for single-family homes. Lenders may also offer their own financial assistance or other low-down-payment loans, such as conventional loans with 3% down and FHA loans with 3.5% down. The year-over-year unemployment rate has increased in Fort Wayne, although the labor market has been more resilient than the national average. Most people in this city work in transportation, utilities, manufacturing, and education and health services.
Conventional loans typically require a down payment, so they are not considered “no down payment” loans. A $400K home with 3 percent down at a 7% interest rate for 30 years would cost approximately $2,600 per month. Keep in mind that this is an estimate, and your actual monthly payment may vary depending on your specific loan terms and any additional costs such as property taxes and insurance. Many first-time buyers have little trouble affording their monthly mortgage payments, which can sometimes be less than what they are paying in rent.
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