Talk To A Live Loan Officer Group 914 (888) 505-1718
Get Started

How Much House Can I Afford In Houston In 2022?

June 29, 2022 | By Stavro Sophocleous
Share

Houston is one of the most vibrant and growing cities in the United States. If you're thinking about moving to Houston, or are just curious about how much house you can afford in 2022, you're in the right place!

In this blog post, we will discuss average home prices in Houston in 2022 as well as how to get approved for a mortgage. We will also show you how to work backward from your salary to understand how much house you can afford. So whether you're a first-time homebuyer or just want to stay ahead of the market, read on for all the information you need!

Average Home Prices in Houston in 2022

To better understand just how hot the Houston real estate market is this year, it helps to get an idea of average home prices. According to Realtor.com, the median list price for homes in Houston is currently $329,000 and trending upward.

If you're wondering how this compares to other major cities, Houston ranks as the third most expensive city in Texas behind only Austin and Dallas. However, it's important to remember that these prices are averages! You can easily find homes that cost much more or less than these averages.

Getting Approved for a Mortgage in Houston

Now that you have an idea of how much homes cost in Houston, you might be wondering how to get approved for a mortgage. The first step is to meet with a lender and get pre-approved for a loan. This will give you an idea of how much money you can borrow and what your interest rate will be.

To get pre-approved for a mortgage, you'll need to gather relevant documentation. They will correspond to five main things: proof of your assets and income, good credit (usually 620 and up), employment verification, and whatever other types of documentation your lender may require. 

Once you have been pre-approved, it's time to start shopping for a home! But just because you've been approved for a specific amount doesn't mean you should automatically assume you can afford the top end of your borrowing budget. In fact, it's usually a good idea to leave yourself some breathing room in case of unexpected costs.

Can My Salary Tell Me How Much House I Can Afford in Houston?

Once you get approved for a mortgage, you might be wondering how much house your salary can actually afford you. The answer to this question isn't always as simple as you might think.

Let’s start with a popular mechanism known as the “Twenty Eight Percent Rule.” According to this rule, your mortgage payment shouldn't be more than 28% of your monthly pre-tax income and 36% of your total debt. This percentage is known as your debt-to-income (DTI) ratio.

For example, let's say you make $100,000 per year. Based on the 28% rule, you would assume that you could afford a home that costs up to $280,000. However, this number doesn't take into account things like taxes, insurance, or other monthly expenses. This is usually a more accurate way to figure out how much house you can afford than simply using the 28% rule.

In Houston, depending on the neighborhood, the median salary to afford a home ranged from $73,000 in the Medical Center neighborhoods, to upwards of $556,000 in the pricier River Oaks neighborhoods. However, by dropping the highest and lowest cost neighborhoods, the average income for buying a home in Houston is about $175,000. Again, while those numbers may seem high, keep in mind that it’s still 26% cheaper to live in Houston as compared to the 20 biggest cities in the U.S.!

Working Backwards to Understand How Much House You Can Afford In Houston in 2022

To get a more accurate idea of how much house you can afford if you're thinking about moving to Houston or buying a home in the city, it's best to work backward from your monthly budget. Start by adding up all of your monthly expenses and subtracting this number from your salary. This will give you your monthly "disposable income."

From there, you can use a mortgage calculator to see how much house you can afford based on your disposable income and other factors. 

You can also work backward by calculating your potential monthly mortgage payment and seeing how that fits into your current budget. To do this, you'll need to know your interest rate and the loan amount - or at least give it your best guess. The loan amount is the purchase price of the home minus any down payment that you make. Be sure to factor in property taxes and mortgage insurance, too!

Once you have your monthly mortgage payment, you'll need to add in the cost of any other debts that you have. This includes things like credit card payments, car loans, and student loans.

After you've added up all of your monthly debt payments, you'll need to subtract that number from your monthly salary. The resulting number is how much money you have leftover each month for other expenses like food, transportation, and entertainment. From there, you can start to look at homes that fit within your budget!

Other Costs That Impact How Much House You Can Afford

Don't forget that the price you agree upon for your home is not the only cost you'll be paying!  There are several other costs associated with buying and owning a home.

For example, you'll need to budget for things like closing costs, repairs, and maintenance. In some cases, you can roll these costs into the home loan, which means your overall loan will be higher than you might have initially anticipated.

You'll also need to pay property taxes and homeowners insurance. If you need private mortgage insurance (PMI), you will also add that to the list. Keep in mind that PMI, property taxes, and homeowners insurance expenses are typically broken down into monthly payments added to your mortgage payment and held in your escrow account. So your monthly overall payment will be more than just the breakdown of your house payment and interest.

When you're budgeting for a new home, be sure to account for all of these additional costs!

Bottom Line on How Much House You Can Afford in Houston in 2022

Looking to buy a home in Houston? We can help! Give us a call today. Our Houston mortgage experts will guide you through the process and help you find the perfect home for your budget. Because at the end of the day, you want a home that will make you happy and give you space to grow, without eating up your total paycheck! So get approved today to find out how much you can borrow, and start crunching numbers to better understand your budget. 

Subscribe Newsletter

Get instant blog update right into your mail box