A new study helps demystify the home-buying process. 

By Brigitt Earley
Updated January 04, 2019

What’s the largest purchase you’ve ever made? If a single piece of furniture or a week-long vacation tops the list (and felt daunting), you might be thinking: How could I ever afford to buy a house? or even wondering how anyone else manages to afford a down payment on a house.

Buying a home calls for mountains of paperwork, having an up-to-date personal finance check-up, understanding the ins and outs of getting a mortgage (and what terms such as refinancing mean), and careful planning to make a monthly mortgage payment as manageable as possible. Even with all that knowledge, aspiring home buyers need to have enough money to make buying a house possible.

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Anyone wondering how that is possible isn’t alone. Despite low interest rates, millennials aren’t buying homes because they’re struggling to save for a down payment, according to studies. But a new report from HSH.com, an online mortgage resource, sheds some light on just how much money prospective buyers need to earn in order to afford the principal, interest, taxes, and insurance payments on a median-priced home in the 50 most populous metro areas in the country.

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A prospective buyer, on average, will need to earn about $61,000 per year in order to afford a home, based on median-home price data from the National Association of Realtors’ 2018 third-quarter data and national mortgage rate data derived from weekly surveys by Freddie Mac.

In San Francisco, those who want to buy a home will have to earn a whopping $200,000 per year. People in Pittsburgh, on the other hand, should earn about $38,900 if they’re considering buying a home. And, of course, this data only covers homes priced at the median for each area—anyone looking for a more upscale or larger home will have to add to that salary.