Affording a comfortable mortgage in Dallas: What homebuyers need to know

Achieving a comfortable mortgage in North Texas is within reach for buyers who conduct thorough research and plan diligently.

In Dallas, realizing the dream of homeownership has become increasingly challenging, with buyers now requiring an annual income of at least $121,398 to comfortably afford a mortgage. This represents a significant increase of $53,000 from 2020, as per recent data from Zillow, a real estate website.

The trend of home prices outpacing income gains is evident nationwide, with Zillow’s projections factoring in a 10% down payment, local home prices, and median income levels.

Among the five largest metropolitan areas in the country, Dallas ranks third in terms of required income levels. Los Angeles and New York surpass Dallas with income levels of $279,250 and $213,615, respectively, while Chicago and Houston have lower income requirements at $104,757 and $95,374, respectively.

Despite Dallas requiring a relatively high income, it remains one of the more affordable Texas metros. For instance, buyers in Houston and San Antonio need an income of around $95,000, while those in Austin require approximately $149,000.

The rise in both home prices and mortgage rates accounts for the increase in required income, according to Zillow officials, who advocate for increased home construction as a long-term solution to improve affordability.

“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates, and rent growth far outpaced wage gains,” noted Orphe Divounguy, a senior economist at Zillow.

Buyers are adopting creative strategies to make purchases feasible, while long-distance movers are targeting less expensive and competitive metros, Divounguy added.

A study by RealtyHop earlier this year found that a Dallas family would need approximately 6.33 years to save for an $81,000 down payment on a home.

To navigate the homebuying process successfully, buyers must assess their monthly income, expenses, and debt obligations to determine their affordable mortgage payments. Understanding regional cost-of-living disparities and housing prices is crucial, allowing buyers to adjust expectations and priorities accordingly.

Ultimately, the key to enhancing affordability lies in constructing more homes, ensuring homeownership remains accessible to all.