The two costs now eat up an average of 60% of monthly income
of ConsumerAffairs
You may know that rising interest rates have made new mortgages much more expensive and inflation has pushed up the cost of child care. But what happens when you have both expenses in your budget?
A new study from real estate marketplace Zillow found that those two expenses might take most of your paycheck.
Researchers found that in some of the nations largest metros, new homeowners would have to spend nearly every dime toward the combination of house payments and child care. In 31 of the largest 50 metros that were included in Zillows analysis, families in the market for a house can expect to spend more than 60% of their income on a new mortgage and child care.
Heres how the numbers break down: the typical family should be ready to pay $1,984 per month on child care and $1,973 on a monthly mortgage payment. The mortgage payment is based on the assumption of a 10% down payment, an interest rate of 6.61% and the median home price in each market.
With the monthly median household income now at $6,640, that leaves $2,683 for other necessary expenses. You know, things like food, health care, transportation, insurance, taxes and other fixed expenses.
Housing costs should be limited to 30% of income
Obviously, thats a lot more spending on just two items than is financially healthy, but often it cant be helped. Zillow says for a mortgage to be affordable it should not cost more than 30% of a familys monthly income.
However, the typical household spends well over these guidelines in every market Zillow analyzed. When you get into the nations most expensive housing markets, the imbalance is even more pronounced.
In Los Angeles, prospective buyers would need to spend 121% of their income on a new mortgage and child care. In San Diego, families would need to spend 113%, and in Seattle, the share is 92%.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-05-13 17:49:59
