To buy a starter home in Phoenix, you’ll need a six-figure salary.
Phoenix, Arizona is a sunny, outdoor city with famous sports franchises, spectacular scenery, and numerous golf courses. However, Phoenix isn’t just in the heart of the Valley of the Sun. It is also home to a vibrant real estate market that has seen significant growth in recent years.
For many people, buy a house in phoenix A dream has come true, but it’s also important to know how it will affect your finances.From your down payment to your monthly mortgage payments, there’s a lot to understand before buying your first home
Whether you already live in the Valley of the Sun or are considering moving to the area, here’s a breakdown of the income you need to buy your first home in Phoenix.
check out our original report Detailed nationwide analysis is possible.
How much income do I need to buy a starter home in Phoenix?
The median sales price for starter homes in Phoenix is $330,000. To afford this, first-time homebuyers in Phoenix would need to earn $101,321 a year, a 6.6% increase starting in 2023.. However, Phoenix’s median income is $89,521. The typical resident often cannot afford to purchase a starter home.
As expected, starter homes in Phoenix are much more affordable than the average home (all price ranges combined). To be able to afford a median-priced home in the area, Must earn $121,368 (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.
Phoenix Housing Market Guide for First-Time Home Buyers
Phoenix has long been a popular destination for homebuyers. sunny and affordable. But the region’s growth and popularity has exploded during the pandemic, and it’s showing little signs of slowing down.In fact, the city consistently top destination For homebuyers to move. This influx has driven home prices up 29% since January 2021, from $325,000 to $459,000 in April 2024. Home prices have nearly tripled in the past decade.
But climate risks are a major concern for Phoenix residents.the city is in the middle of it Decades of severe drought It has plagued the southwestern United States, where temperatures recently reached 110 degrees Fahrenheit for 31 consecutive days. in this city in 2023 as well. hottest and driest on record.These trends are expected to continue As climate change worsens.
This desert city has many world-class facilities throughout its vast neighborhood.Several Popular areas in Phoenix include central city, maryvaleand Ahwatukee Foothills. From the Phoenix Zoo and Heard Museum to South Mountain and Camelback Mountain, there are many reasons to call Phoenix home.
What is the typical down payment for a starter home in Phoenix?
Here are some common down payment amounts for a typical $330,000 starter home in Phoenix.
Down payment percentage | down payment amount |
Down payment 3% | $9,900 |
Down payment 3.5% | $11,550 |
Down payment 5% | $16,500 |
Down payment 10% | $33,000 |
15% down payment | $49,500 |
20% down payment | $66,000 |
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 Phoenix?
The typical monthly mortgage payment for a starter home in Phoenix is $2,533. This assumes a 3.5% down payment and an interest rate of around 7%.
If you think this payment is too high, consider the following: rent an apartment in phoenix. The average rental price is $1,962, which could be a better option if you’re saving for a down payment on a home.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 Phoenix, 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 best decision for you.
From there, phoenix agent 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.