To buy a starter home, you need to earn close to $90,000 a year.
Minneapolis, Minnesota is known for its beautiful lakes, abundant outdoor recreation, deep history, and snowy winters. In addition to being a cultural hub and a unique place to live, Minneapolis is also home to a competitive real estate market that has skyrocketed in popularity in recent years.
For many people, buy a house in minneapolis A dream has come true, but it’s also important to know how it will affect your finances.From down payments to monthly mortgage payments, there’s a lot to understand before buying your first home
So whether you already live in the City of Lakes or are considering moving to the area, here’s a breakdown of the income you need to buy your first home in Minneapolis.
check out our original report Detailed nationwide analysis is possible.
How much income do I need to buy a starter home in Minneapolis?
The median sales price for starter homes in Minneapolis is $255,000. To afford this, first-time homebuyers in Minneapolis would need to earn $85,013 a year, an increase of 7.2% from 2023.. The median income in Minneapolis is $106,561. The typical resident can afford a starter home.
Only metro California requires a higher annual income to purchase a starter home. Anaheim, Los Angeles, Oakland, San Diego, San Francisco, and San Jose all cost over $175,000.
As expected, starter homes in Minneapolis are more affordable than the average home (all price ranges combined; see methodology for details). To be able to afford a median-priced home in the area, Must earn $103,640 (As of October 2023).
Nationally, you need an income of $75,849 to buy a typical starter home, which costs an average of $240,000. The average household income in the United States is estimated at $84,072.
Minneapolis Housing Market Guide for First-Time Home Buyers
Minneapolis has experienced a growing but changing market over the past several years. Home prices have increased only 8% since January 2021, from $299,250 to $325,000. but, like many cities Across the country, this region is suffering from a housing shortage. As a result, Minneapolis recently caning sale – Home sales reached a 20-year high in 2021, but fell to a 12-year low in 2023.
Housing prices also follow this pendulum to some extent. Although prices haven’t gone up that much overall, we’re seeing some big peaks and troughs. For example, from February 2022 to June 2022, prices increased by 16%. After that, it decreased by 17.8% from June to December. This pendulum swing has been seen in many subways across the country, often with reactions such as: Change in mortgage interest rate.
Minneapolis also has did a lot of work In response to residents’ housing needs, we will provide approximately 3,800 new affordable housing units in 2022, for a total of approximately 18,000 housing units. This effort continues and is aimed at filling the housing shortage caused by the Great Recession.
If you’re thinking of moving to Minneapolis, the area offers a variety of amenities and attractions in diverse neighborhoods. Minnehaha Park, Guthrie Theatre, Chain of Lakes, and Minneapolis Sculpture Garden are some of the most famous spots, offering waterfront views and fun experiences for people of all ages.
Popular areas in Minneapolis include Bryn Mawr, calhoun islands, camdenand nokomis.
What is the typical down payment for a starter home in Minneapolis?
Here are some common down payment amounts for a typical $255,000 starter home in Minneapolis.
Down payment percentage | down payment amount |
Down payment 3% | $7,650 |
Down payment 3.5% | $8,925 |
Down payment 5% | $12,750 |
Down payment 10% | $25,500 |
15% down payment | $38,250 |
20% down payment | $51,000 |
Down payments can range from 0% to 100% of the total home price, depending on your budget, loan type, and long-term priorities. Experts have traditionally recommended budgeting for a 20% down payment, but as home prices continue to rise and wage growth remains sluggish, 15% down payment It’s becoming more common.
Depending on the type of loan, you may be able to set a lower down payment. for example, Federal Housing Administration (FHA) The loan requires a down payment of just 3.5%, but the down payment is minimal. conventional loan is 3%. These amounts typically depend on your credit score, so buyers with higher credit scores may be able to make a smaller down payment.
What are the typical mortgage payments for a starter home in Minneapolis?
The typical monthly mortgage payment for a starter home in Minneapolis is $2,125. This assumes a 3.5% down payment and an interest rate of approximately 7%.
If you think this payment is too high, consider the following: rent an apartment in minneapolis. The median rental price is $1,583, well below typical mortgage payments.You can also use affordable price calculator Find out how much you can afford based on your income and down payment.
What should I do next?
If you’re considering your first home in Minneapolis, it’s important to understand: how much house can you buy. Consider your annual income, credit score, current mortgage rates, and local market trends to make the decision that’s best for you.
From there, agent in minneapolis We can help you navigate the entire home buying process and provide valuable local expertise. To learn more about how to buy a home, visit Redfin’s site. First time home buyer’s guide.
methodology
Redfin divides all U.S. real estate into five buckets based on Redfin’s estimates of home market value. He has three tiers of the same size and a tier for the bottom 5% and top 5% of the market. Redfin defines a “starter home” as one whose sales price falls between the 5th and 35th percentiles of homes. Redfin estimates layer.
We calculated the annual income needed to purchase a starter home, assuming the buyer does not spend more than 30% of their income on home payments. Home payments are calculated assuming the buyer has made her 3.5% down payment, and also take into account the median monthly sales price and average mortgage interest rate.
National income data are adjusted for inflation using the Consumer Price Index. 2024 earnings are estimated based on the U.S. Census Bureau’s (ACS) 2022 median household income projections using 12-month moving average nominal wage growth rates. This rate was compiled from the Current Population Survey and reported by the Federal Reserve Bank of Atlanta.
We assume that your home payment includes mortgage principal, interest, property taxes, homeowner’s insurance, and mortgage insurance (if applicable).
All data is sourced as of February 2024 unless otherwise noted. The Minneapolis metropolitan area includes St. Paul.