How Much Can I Afford In Seattle?
How Much House Can I Afford in Seattle?
If you’re thinking about buying a home in Seattle or the Greater Seattle area, one of the first questions you probably have is:
How much house can I actually afford?
It’s an important question—but your income alone doesn’t give you the answer.
Two people could each earn $150,000 per year and have very different home-buying budgets. That’s because lenders look at several factors when determining how much you may qualify to borrow, and the amount you’re comfortable spending every month may be different from the maximum amount you can qualify for.
I’m Steve Parco with Parco Homes. As both a mortgage loan officer and real estate agent serving the Greater Seattle area, I get this question from homebuyers all the time.
Here’s what I think buyers should understand before they start looking at homes.
Start With Your Monthly Payment, Not Just the Home Price
It’s easy to start your home search by picking a price.
Maybe you’re thinking:
“I want to buy a $700,000 home.”
But I like to approach the question from the other direction:
What monthly housing payment are you comfortable with?
Once you have a realistic monthly payment in mind, you can work backward to determine what home-price range may make sense.
That’s important because your mortgage payment isn’t determined by the purchase price alone.
What Determines How Much House You Can Afford?
Several pieces of your financial picture can affect your buying power.
1. Your Income
Your income is obviously an important part of qualifying for a mortgage.
But income is only one part of the equation.
A household earning $150,000 a year with very little monthly debt may have considerably different buying power than another household earning the same amount but carrying car payments, student loans, credit-card debt or other monthly obligations.
2. Your Monthly Debts
Lenders generally look at your existing monthly debt obligations along with the proposed housing payment when evaluating your mortgage application.
This is why two buyers with identical incomes can qualify for very different loan amounts.
Before you start shopping, it’s helpful to understand how your existing monthly obligations affect the overall picture.
3. Your Down Payment
One of the biggest misconceptions I hear from homebuyers is:
“Don’t I need 20% down to buy a house?”
Not necessarily.
Depending on your circumstances and the loan program, there may be options that allow qualified buyers to purchase a home with less than 20% down.
For example, on a hypothetical $700,000 purchase price:
5% down = $35,000
10% down = $70,000
20% down = $140,000
Those examples don’t mean every option will be available or appropriate for every buyer. They’re simply a good illustration of how dramatically the down payment can change the amount of cash required for a purchase.
And remember: your down payment isn’t necessarily the only cash you’ll need. Closing costs, prepaid expenses and reserves may also need to be considered.
4. Interest Rates
Interest rates can make a significant difference in the monthly payment associated with a particular loan amount.
That’s one reason I don’t like relying on generic online affordability calculators as the final answer.
The same purchase price can result in a different monthly payment depending on the loan structure, interest rate and other factors at the time you’re buying.
5. Property Taxes and Homeowners Insurance
Your mortgage payment isn’t just principal and interest.
Property taxes and homeowners insurance are also important pieces of the monthly housing expense.
Because these costs can vary from one property to another, two similarly priced homes don’t necessarily have identical monthly costs.
6. HOA Dues
If you’re considering a condo, townhome or a home in a community with a homeowners association, HOA dues may also affect your monthly housing expense and mortgage qualification.
This is particularly important when comparing properties.
A home with a lower purchase price but significant HOA dues isn’t automatically less expensive on a monthly basis than a somewhat higher-priced property without those dues.
So, How Much Income Do You Need to Buy a Home in Seattle?
There’s no single salary that determines whether you can afford a particular home price.
That’s why questions such as:
“Can I afford a house in Seattle on a $150,000 salary?”
or
“How much house can I afford if our household makes $200,000?”
need more information before they can be answered responsibly.
We need to consider your income along with your debts, available funds, credit profile, loan program, current interest rate environment and the estimated expenses associated with the particular property.
That’s also why I’ll be covering specific income examples in upcoming Parco Homes guides and videos.
Seattle Isn’t the Only Option
Another important part of determining your home-buying budget is deciding where you want to buy.
Greater Seattle contains many different housing markets and property types.
Depending on your budget and priorities, your search might include Seattle itself or surrounding communities such as Bellevue, Kirkland, Redmond, Bothell, Renton, Lynnwood and other parts of the Puget Sound region.
The question isn’t always simply:
“How much house can I afford?”
Sometimes the better question is:
“What can my budget buy in the areas where I actually want to live?”
That’s a topic we’ll explore extensively here on Parco Homes.
Five Numbers to Know Before You Start Shopping
Before seriously looking at homes, I recommend getting a clear picture of five things:
Your household income.
Your recurring monthly debts.
The amount of money you have available for your purchase.
The monthly housing payment you’re comfortable with.
The approximate price range your financing supports.
Once those pieces start coming together, your home search becomes much more focused.
Instead of scrolling through homes and wondering whether they’re realistic, you can start shopping with an actual strategy.
Watch: How Much House Can I Afford in Seattle?