Ever wonder what is a typical affordable home in today's makret?
Okay, let's estimate what price house a couple could afford in West Hartford based on both individuals earning the average Connecticut hourly wage of $39.08 (as reported by CT Department of Labor for March 2025).
1. Calculate Combined Gross Annual Incokme
Individual Annual Income: $39.08/hour * 40 hours/week * 52 weeks/year = $81,286.40
Combined Gross Annual Income: $81,286.40 * 2 = $162,572.80
2. Estimate Combined Gross Monthly Income:
Combined Gross Monthly Income: $162,572.80 / 12 months = $13,547.73
3. Apply the 28/36 Rule (as a guideline):
28% Rule (Housing Costs): 28% of $13,547.73 = $3,793.37 (This is the estimated maximum they should spend on principal, interest, property taxes, and homeowners insurance - PITI).
36% Rule (Total Debt): 36% of $13,547.73 = $4,877.18 (This is the estimated maximum for all monthly debt, including the mortgage, car loans, student loans, credit card minimums, etc.).
4. Estimate Affordable House Price (This requires assumptions about interest rates, property taxes, and insurance in West Hartford):
Let's make the following rough assumptions for a 30-year fixed-rate mortgage:
Interest Rate: 7% (as of April 17, 2025 - this can fluctuate)
Property Taxes in West Hartford: Approximately 1.7% of the home's value annually (this varies by specific location and mill rate).
Homeowners Insurance: Approximately $1,800 per year ($150 per month).
No significant other debt and a 20% down payment.
Now, we need to work backward from the estimated maximum PITI to get a potential home price. This is best done using a mortgage calculator, but we can illustrate the concept:
If their maximum PITI is around $3,793.37, we need to subtract the estimated property taxes and insurance to get an approximate principal and interest (PI) payment.
Let's assume a home price of $550,000 for this illustration:
Estimated Annual Property Taxes: $550,000 * 0.017 = $9,350 ($779.17 per month)
Homeowners Insurance: $150 per month
Total Taxes & Insurance: $779.17 + $150 = $929.17 per month
Maximum Principal & Interest Payment: $3,793.37 - $929.17 = $2,864.20
Using a mortgage calculator with a loan amount of $440,000 (80% of $550,000), a 7% interest rate, and a 30-year term, the principal and interest payment would be roughly $2,929.
Therefore, with these assumptions, a two-earner couple in West Hartford making the average hourly wage might be able to afford a home in the range of roughly $500,000 to $600,000.
Important Considerations
Down Payment: A larger down payment would reduce the loan amount and monthly payments, making a more expensive home potentially affordable.
Other Debt: Significant car loans, student loans, or credit card debt would reduce the amount they can afford for a mortgage.
Credit Score: Excellent credit could secure a lower interest rate, increasing affordability.
Job Security and Stability: Lenders will also consider the stability of their employment.
Future Expenses: They should also consider future expenses like potential childcare, increased living costs, etc.
Recommendation
The best way for this couple to determine their affordable home price is to:
Get pre-approved for a mortgage: This will give them a realistic idea of how much a lender is willing to lend them based on their specific financial situation.
Use online mortgage affordability calculators: Inputting their combined income, debts, and estimated down payment will provide a more personalized estimate.
Speak with a local real estate agent (like yourself!): You can provide valuable insights into the West Hartford market, typical costs, and connect them with local lenders.
Keep in mind that the $500,000 - $600,000 range is a rough estimate based on several assumptions. Actual affordability could be higher or lower depending on their individual circumstances.
Job Security and Stability: Lenders will also consider the stability of their employment.
Future Expenses: They should also consider future expenses like potential childcare, increased living costs, etc.
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ALEX TEPLITSKIY
REALTOR®
(860) 543-9417
alex.teplitskiy@gmail.com
Licensed in Connecticut
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