Here’s how much house you can afford to buy, based on your job

By Aarthi Swaminathan

‘It’s clear that for a majority of occupations in the U.S., the median earner who is looking to buy a home would struggle to afford one,’ Realtor.com senior economist says

Real estate isn’t just about location, location, location. These days, it’s also about your occupation.

House hunters are facing one of the toughest markets ever for buying a home, with soaring prices and high interest rates. The 30-year mortgage rate remains close to 7%, while home prices hit a new record high in May.

Competition is also stiff: The typical home listed for sale was getting an average of 2.8 offers in May, the latest month for which data was available from the National Association of Realtors.

And for some aspiring home buyers, particularly those who earn less than the median U.S. income, the decline in housing affordability has put homeownership even farther out of reach. With a median-priced home at nearly $420,000 – an all-time high – a home buyer should make about $115,000 to comfortably afford homeownership, according to calculations by Redfin (RDFN). That includes the mortgage payment as well as taxes, property insurance and more.

MarketWatch worked with Realtor.com to analyze Bureau of Labor Statistics occupation data, looking at median wages for 800 jobs to determine how much the typical worker in specific professions can afford in terms of home price. Realtor.com is operated by Move Inc., a News Corp subsidiary, and MarketWatch publisher Dow Jones is also owned by News Corp. (NWS).

The analysis assumed that housing costs only took up 30% of a buyer’s gross income, as personal-finance experts typically recommend. It also assumed the buyer was making a down payment of 3.5% of the home’s sale price, which is the minimum requirement for a Federal Housing Administration loan, with a 30-year mortgage rate of 6.8%. The home-price amounts exclude property taxes, insurance and homeowners-association fees.

From the findings, “it’s clear that for a majority of occupations in the U.S., the median earner who is looking to buy a home would struggle to afford one,” Ralph McLaughlin, a senior economist at Realtor.com, told MarketWatch.

“There’s little doubt that the meteoric rise in home prices over the past four years is to blame, and the fact that mortgage rates remain high is like constantly rubbing salt in that wound,” he added.

Jobs that afford the smallest home-buying budgets

Home buyers working in service-sector jobs, which pay the least, had the lowest budgets. These jobs include hosts and hostesses in coffee shops, lounges and restaurants; cooks and fast-food workers; and gambling and sports-book writers and runners. Food-industry jobs are the fourth-biggest occupation category, according to the BLS.

For these workers, who earn a median annual wage of $29,000, the maximum budget for a house would be about $115,000, according to MarketWatch calculations.

   Gambling and Sports Book Writers and Runners                8,700      $29,170  $111,405  $115,446 
   Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop    425,020    $29,220  $111,596  $115,644 
   Cooks, Fast Food                                            673,490    $29,260  $111,749  $115,802 
   Amusement and Recreation Attendants                         361,680    $29,390  $112,246  $116,317 
   Shampooers                                                  7,360      $29,530  $112,780  $116,871 
   Fast Food and Counter Workers                               3,676,580  $29,540  $112,818  $116,910 
   Miscellaneous Entertainment Attendants and Related Workers  390,020    $29,560  $112,895  $116,989 
   Cashiers                                                    3,298,660  $29,720  $113,506  $117,623 
   Ushers, Lobby Attendants, and Ticket Takers                 117,560    $29,780  $113,735  $117,860 

Jobs that can afford the biggest home-buying budgets

At the other end of the spectrum, many workers in the healthcare field – which includes some of the highest-paying occupations in the U.S. – had the highest budgets for buying a house. Jobs that afforded a big home-buying budget included physicians, prosthodontists and dentists, as well as non-healthcare occupations like airline pilots and flight engineers.

The category of healthcare practitioners and technical occupations is the seventh-largest among all jobs, according to the BLS.

For the workers who earned the most – upwards of $219,000 – the maximum budget for a house would be over $867,000, according to MarketWatch calculations.

   Physicians, All Other                           310,080  $236,000  $901,325  $934,016 
   Prosthodontists                                 570      $234,000  $893,687  $926,100 
   Dentists, All Other Specialists                 5,920    $227,690  $869,588  $901,127 
   Family Medicine Physicians                      112,010  $224,640  $857,939  $889,056 
   General Internal Medicine Physicians            67,210   $223,310  $852,860  $883,792 
   Airline Pilots, Copilots, and Flight Engineers  93,670   $219,140  $836,934  $867,289 
   Nurse Anesthetists                              47,810   $212,650  $812,147  $841,603 
   Chief Executives                                211,230  $206,680  $789,347  $817,976 
   Pediatricians, General                          34,870   $198,690  $758,832  $786,354 
   Aircraft Pilots and Flight Engineers            146,420  $171,210  $653,881  $677,597 

Home-buying assistance for workers with debt or low incomes

Some industries also offer special mortgage rates to employees. For instance, physicians can take advantage of physician loans, also known as doctor loans, a kind of mortgage that doesn’t require a down payment and allows higher debt-to-income ratios, according to Bankrate. The loans are offered to doctors who are aspiring homeowners but carry a high level of student-loan debt.

Medical-school graduates owe a median of $215,100 in student-loan debt, according to the Education Data Initiative, which cited data from the Association of American Medical Colleges.

While the fast-food and restaurant industry doesn’t offer the same type of program to help lower-income workers afford homes, the federal government and state governments do offer home-buying assistance.

For instance, New York City’s HomeFirst Down Payment Assistance Program offers eligible first-time home buyers up to $100,000 to put toward a down payment or closing costs for a property within the city’s five boroughs. These buyers need to have a maximum household income of up to 80% of the area’s median income, according to the city.

Private lenders also offer programs, such as zero-down-payment mortgages from Bank of America (BAC) and United Wholesale Mortgage (UWMC), and down-payment assistance from Wells Fargo( WFC) , to eligible home buyers in certain states.

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-Aarthi Swaminathan

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07-11-24 0716ET

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