Here's how much you need to earn to comfortably afford a home in the 25 most expensive ZIP codes in America
Well, either that or lots and lots of cash.
With median home prices starting at just over $2 million, these ZIP codes are the definition of exclusive. Real estate listings site Property Shark used data from 2016 home sales to determine which ZIP codes in the US were most expensive for buyers. Only ZIP codes containing more than five sold properties were considered.
California and New York dominated the list. Just two of the 25 ZIP codes are located in other states.
So what does it take to buy a home in one of these communities?
For starters, unless you're paying with cash, you have to be prepared to prove your income and fork over a down payment of at least 20%. If you qualify for a mortgage, it won't be your average, run-of-the-mill loan. At this price point, banks issue a "jumbo mortgage." It's basically the same thing ... but bigger.
To get approved for a jumbo mortgage, your monthly payment must be 38% or less of your pre-tax income. Not that you should stretch your budget that far. Many, many people own or rent homes that aren't technically "affordable." Among American homeowners, 10%, or 7.6 million, spend more than half their household income on their mortgage. But in an ideal world, your housing costs would be much lower.
The standard measure for "affordable" housing, regardless of the price of the home, is that total monthly expenses should not exceed 30% of your pre-tax income.
But a mortgage is just the beginning of your housing costs. With one of these homes, your property taxes - not to mention your air-conditioning bills - are going to be steep. It's not cheap to maintain the pool and the lawn and other ongoing repair costs. Oh, and don't forget about homeowner's insurance.
Given all of the extra expenses of homeownership, we broke the 30% measure of housing affordability down into 5% for expenses and 25% for your monthly mortgage payment. Then, we did the math so you don't have to: If you're earning the below salaries, your mortgage will take only about 25% of your monthly income, leaving another 5% for extra housing costs - and putting you safely at 30%.
Keep reading to see how much you need to earn annually to afford a median-priced home in each of the 25 most expensive ZIP codes in the US.