How Much You'll Need to Earn to Make Mortgage Payments in 15 Big Cities

Just because you’re not raking in the big bucks—or, perhaps, many bucks at all—it doesn’t mean you can’t become a homeowner, even in a big city.

Buyers need to earn only $20,294 a year to make their monthly payments on a median-price home in … wait for it … Indianapolis, according to a recent study from SmartAsset. Buyers in the Midwestern metropolis had the lowest monthly housing bills of the 15 cities measured in the report.

The personal finance website looked at the minimum salary buyers need to qualify for a 30-year mortgage with a 4% interest rate, and to afford the monthly loan, real estate taxes, and home insurance payments in the largest U.S. cities.

That assumes buyers aren’t carrying any debt and have a 20% down payment at the ready—which, to be honest, doesn’t describe many first-time home buyers (especially those making $20,000 per year).

It also explains why they’re able to make so little and still afford a home—they would be forking over about 36% of their income before taxes on housing costs. True, that doesn’t leave much left over for other expenses like cellphone or cable bills, let alone a night out. But it does meet the 40% of income threshold that buyers typically need to qualify for a loan (again, provided they don’t have debt and have excellent credit).

The results show that “there are places in the country where buying a home is affordable,” says AJ Smith, vice president of content at SmartAsset. And it illustrates that (big surprise!) buyers who make larger down payments have lower monthly housing bills.

“It’s important to think about the initial housing costs as well as how it’s going to fit into your monthly budget.”

After Indianapolis, the next city to score a low monthly payment was Jacksonville, FL, requiring just $23,332 in annual earnings. That was followed by San Antonio, TX, at $23,529; Philadelphia, at $24,465; Columbus, OH, at $25,702; Phoenix, AZ, at $26,803; Houston, TX, at $27,067; Dallas, at $27,505; Chicago, at $44,244; and Austin, TX, at $47,523.

The most expensive cities? There are no shockers here. San Diego made the list, at $75,816; Los Angeles, at $77,230; New York City, at $96,993; and San Jose, CA, at $99,963. The priciest city was San Francisco, at $128,598.

For those who can come up with that down payment, their mortgage payments are often cheaper than renting in many Midwestern cities, says Indianapolis-based mortgage lender Don Frommeyer of Marine Bank.

“When you buy a home, it’s like a glorified savings account,” he says. “You buy it, you make monthly payments on it, and at the end of the loan you have an asset” that should increase in value over time.

The median list price was just $133,000 in Indianapolis, according to realtor.com®. (The list price is different from the median home value, which SmartAsset used for its calculations.)

In Jacksonville, FL, buyers need to bring in just more than $23,000 to afford a median-price home, according to SmartAsset. The median list price is $200,000, according to realtor.com.

But they will get what they pay for, says local Realtor® Donna Quarto of Watson Realty Corp.

“It’s going to be something you need to fix. A lot of them are short sales … or houses that have been really run down,” she says. “You’re going to have to find something in the very low hundreds or under, a condo maybe.”

And aspiring homeowners, particularly ones with smaller salaries, should make sure they truly can afford a home before they buy one, she cautions.

“Between your payments, your taxes, and your homeowners insurance and room for repairs, you’re paying to live in your house without much left over,” Quarto says. “If something goes wrong with the house, where does the money come from?”

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