MAP: How much do you need to make to buy a home in each state?

This U.S. map on income needed to buy a home from the Visual Capitalist team has been floating around. It’s a good snapshot, and I just want to offer a few notes on methodology.

– They assume 10% down on a median-priced 3-bedroom home with a 6.625% mortgage rate.

– They also assume what they call a “30% income-to-housing cost limit” which includes taxes and insurance.

I think they meant to say 30% housing debt-to-income (DTI) ratio here.

DTI ratios are how lenders qualify borrowers.

They take all of your monthly home purchase costs (principal, interest, taxes, insurance, and mortgage insurance) plus your non-housing monthly costs (like payments on credit cards, student loans, car loans, etc.) and divide that by your monthly income to calculate the DTI ratio.

Lenders allow this ratio to go to 43%, and often will allow it to go higher based on compensating factors like high credit scores, money left over in the bank after your home purchase, etc.

So this map is a decent snapshot, but the formula stated is not how lenders qualify you to buy homes.

You need to consult with a lender to do that. And lenders will do that consultation for free.

Talking to a lender is the best way to know what you can afford.