Good news: households including at least one person with a high school diploma or GED can afford the typical mortgage payment in most large metro areas across the U.S., according to a new analysis by Zillow. However, soaring home values have outpaced incomes have made down payments a barrier for many, particularly first-time home buyers.

What this all means is that mortgage rates have dipped to multi-year lows in recent months, meaning monthly payments are relatively affordable for buyers who can secure a down payment. However, down payments are a challenge to afford for many as prices have grown faster than incomes over the past several years. A recent Zillow analysis found that buyers need 1.5 years longer to save for a 20% down payment on the typical home than 30 years prior, and the difference is much more extreme in the most expensive metros – 13.3 years longer in San Jose, for example.

This effect is especially pronounced for first-time buyers who do not have the equity of an existing home to put towards a down payment on a new one. Zillow data shows that 46% of a typical down payment comes from savings for first-time buyers, compared with 35% for repeat buyers, according to a Zillow news release.

“The influx of highly educated workers into already-expensive metros with stagnant or slow-growing inventory has made it difficult for those with less education and earning potential to enter those markets,” said Skylar Olsen, director of economic research at Zillow. “There can also be considerable variation within metros. While a bachelor’s degree may be enough to afford a mortgage on the typical home in the San Diego metro at large, it’s likely to be insufficient in pricey areas like La Jolla. And that’s only after scraping together a sizable down payment, which is a huge hurdle for most buyers.”

For households that secure a down payment, the median mortgage payments are affordable for those with a high school education in 36 of the 50 largest U.S. metros. The remaining 14 metros require earnings associated with at least a two-year Associate’s degree.

The median income of a university degree holder is necessary to afford the median mortgage payment in the five most expensive West Coast metros. A Bachelor’s degree is typically needed in San Diego and Seattle, while the typical income of someone with an advanced degree is required in San Jose, San Francisco and Los Angeles. The typical mortgage payment is affordable for those with Associate’s degrees in Boston, New York, Sacramento, Washington, D.C., Denver, Portland, Riverside, Salt Lake City and Miami, the news release added.

In only one metro, Oklahoma City, can those with less than a high school degree usually afford the typical mortgage payment. Households in Oklahoma City benefit from a combination of low housing costs – only three of the 50 largest metros have a lower median mortgage payment – and relatively high median incomes for households in which nobody has a high school diploma.

Median rent was 27.8% of the typical U.S. household income in Q1 2019. This is up slightly from the previous quarter and just below levels from a year earlier. Rent was most affordable for those in Pittsburgh, where the median rent is 21.4% of the typical household income. Los Angeles is the least affordable large metro for renters – 46.1% of the typical income is required to pay the median rent there.

See more about the findings below:

Metropolitan Area Median Monthly
Mortgage Payment
– Q1 2019
Education Needed
to Afford
% Income Spent on
Median Mortgage
% Income Spent
on Median Rent
New York, NY $1,741.57 Associate’s Degree 26.1% 36.3%
Los Angeles-Long
Beach-Anaheim, CA
$2,569.80 Advanced Degree 41.8% 46.1%
Chicago, IL $891.27 HS Diploma or GED 14.9% 28.2%
Dallas-Fort Worth, TX $965.74 HS Diploma or GED 16.4% 28.0%
Philadelphia, PA $922.80 HS Diploma or GED 15.4% 26.8%
Houston, TX $814.05 HS Diploma or GED 14.8% 28.7%
Washington, DC $1,608.79 Associate’s Degree 18.6% 25.1%
Lauderdale, FL
$1,122.56 Associate’s Degree 23.8% 40.7%
Atlanta, GA $866.84 HS Diploma or GED 15.3% 25.5%
Boston, MA $1,844.41 Associate’s Degree 24.4% 31.7%
San Francisco, CA $3,741.22 Advanced Degree 41.6% 38.3%
Detroit, MI $639.10 HS Diploma or GED 12.5% 24.0%
Riverside, CA $1,454.72 Associate’s Degree 26.6% 36.4%
Phoenix, AZ $1,050.06 HS Diploma or GED 19.4% 26.7%
Seattle, WA $1,937.79 Bachelor’s Degree 26.9% 31.0%
Minneapolis-St Paul,
$1,065.04 HS Diploma or GED 15.9% 25.4%
San Diego, CA $2,325.11 Bachelor’s Degree 34.5% 39.3%
St. Louis, MO $658.41 HS Diploma or GED 12.2% 21.5%
Tampa, FL $844.39 HS Diploma or GED 18.7% 31.9%
Baltimore, MD $1,060.31 HS Diploma or GED 15.9% 26.3%
Denver, CO $1,607.60 Associate’s Degree 23.9% 31.3%
Pittsburgh, PA $568.97 HS Diploma or GED 11.1% 21.4%
Portland, OR $1,567.81 Associate’s Degree 24.7% 29.5%
Charlotte, NC $821.93 HS Diploma or GED 15.5% 25.2%
Sacramento, CA $1,623.76 Associate’s Degree 27.3% 32.2%
San Antonio, TX $766.37 HS Diploma or GED 15.7% 28.0%
Orlando, FL $940.13 HS Diploma or GED 19.7% 32.1%
Cincinnati, OH $673.38 HS Diploma or GED 12.5% 24.2%
Cleveland, OH $578.82 HS Diploma or GED 12.7% 25.6%
Kansas City, MO $762.82 HS Diploma or GED 13.8% 23.4%
Las Vegas, NV $1,105.62 HS Diploma or GED 22.0% 27.8%
Columbus, OH $758.88 HS Diploma or GED 13.6% 24.4%
Indianapolis, IN $658.01 HS Diploma or GED 12.7% 23.8%
San Jose, CA $4,766.46 Advanced Degree 45.8% 34.2%
Austin, TX $1,230.13 HS Diploma or GED 19.2% 26.6%
Virginia Beach, VA $907.03 HS Diploma or GED 16.3% 26.0%
Nashville, TN $1,010.27 HS Diploma or GED 18.1% 27.3%
Providence, RI $1,162.75 HS Diploma or GED 20.1% 29.3%
Milwaukee, WI $917.67 HS Diploma or GED 17.7% 25.8%
Jacksonville, FL $845.96 HS Diploma or GED 16.7% 27.5%
Memphis, TN $552.02 HS Diploma or GED 12.5% 25.5%
Oklahoma City, OK $578.42 No HS Diploma 11.8% 22.5%
County, KY
$638.71 HS Diploma or GED 12.8% 24.0%
Hartford, CT $905.46 HS Diploma or GED 14.6% 25.9%
Richmond, VA $905.85 HS Diploma or GED 15.4% 24.2%
New Orleans, LA $688.75 HS Diploma or GED 15.8% 32.7%
Buffalo, NY $630.83 HS Diploma or GED 12.9% 25.0%
Raleigh, NC $1,049.28 HS Diploma or GED 16.7% 23.2%
Birmingham, AL $575.66 HS Diploma or GED 12.6% 24.1%
Salt Lake City, UT $1,436.99 Associate’s Degree 22.9% 25.8%


Source: Zillow