WASHINGTON – When it comes to how much a person’s income goes toward a mortgage or rent in America’s largest cities, D.C. isn’t the best, but it is far from the worst.
In D.C., home buyers have the edge on average, with close to 19 percent of a person’s income going toward paying off a mortgage in 2016. That number is down from 22 percent, which is the average of the data collected between 1985 through 2000 by Zillow.
“The maximum a lender wants to see is somewhere around 28 percent, so I think it is still in the good range,” said Jeff Taylor of Digital Risk and a member of the board of directors for the Mortgage Bankers Association.
Nationally, heading to the West Coast could have you shelling out more cash each month. People in Los Angeles, San Francisco and San Jose are using more than 40 percent of their income, on average, to pay their lenders.
Looking to have more money in the bank each month, people in Pittsburgh and Indianapolis only put 11 percent of their incomes on average toward their mortgage each month.
People in D.C. do spend a bit more than others on rent. On average, those who rent in D.C. spend 28 percent of their incomes on a rental home or apartment. Even though it costs more, Taylor said many millennials are making the choice to rent instead of owning.
“It’s buying them the [option] for where they ultimately want to stay long-term,” Taylor said.
In the late 1980s and 1990s renters in D.C. only put 18 percent of their income, on average, toward a place to stay.
Renters in the nation’s capital are now doing better than many of their counterparts in other big cities. In Los Angeles, people spend close to half of their income on rent. On the lower side of the spectrum, people in cities such as Pittsburgh and St. Louis are spending around 23 percent of their income on rent.
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