How Much Home Can the Austin Home Buyer Afford?

Real Estate Agent with WJK Realty 0570241

My friend Garreth Wilcock wrote a good piece on how to determine what home buyers can afford. Its a nice short read, but gives insight on how to figure out what price home you can afford. Thanks Garreth!

Original content by Garreth Wilcock TREC #574729

While writing about the Affordability Gap for homes at Mueller Austin Texas, I realized it would be a good idea to recap on how much home a buyer can afford and relate this to the Austin Median Family Income (MFI).

MFI is measured by metropolitan area by the Department of Housing and Urban Development. In Austin in 2011, the median family income for a family of four is $74,875.

To make some assumptions about monthly debt ($500), annual property taxes of $7000 and an interest rates at around 4.125%. This is how much house you could afford -$260,000 - $287,000 (depending on which ratios you use)

This results in a monthly payment of $1700 - $1900 (including principle interest taxes and insurance)


There are lots of different mortgage calculators out there - I used one at CNN money none of them are perfect, as most don't factor in the Austin challenge - property taxes of 2.3%. The interesting thing to me is the difference that an interest rate of 6% makes. With everything else being equal, the same income could support $217,000 to $239,000.

For someone earning double the median family income, say $150,000 with other debts of $1000 a month, a $50,000 down payment and 4.125% interest rate, a home price of $583,000 to $634,000 is possible.

At Mueller market rate homes span the $290k- 900k range, with an affordable program with homes below $175k. There's a distinct gap for the family earning the median family income. 


Comments (4)

Kristin Johnston - REALTORĀ®
RE/MAX Realty Center 262-567-2455 - Waukesha, WI
Giving Back With Each Home Sold!

Betina, well done...great title and I hope you get alot of traffic on this one...too many times buyers overspend!

Jan 06, 2012 02:17 AM
Betina Foreman
WJK Realty - Austin, TX
Realtor, C.N.E., with WJK REALTY

Thanks Kristin. I always tell my buyers NOT to spend every penny they are approved for. You don't want to live simply to work to afford your mortgage

Jan 06, 2012 04:04 AM
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Betina, very wise advice on buying what is comfortable for YOU.

Jan 06, 2012 04:22 AM
Betina Foreman
WJK Realty - Austin, TX
Realtor, C.N.E., with WJK REALTY

Thanks Janice! I hope things are going well at KW! Have a great 2012!


Jan 07, 2012 03:07 AM