How Much You Need to Make to Buy a House in Austin

In 2024, we’ve got lower prices, higher monthly payments


The market isn’t red-hot anymore, but interest rates crush first-time buyers (image via Getty Images)

A few years ago, it was next to impossible for middle-income, first-time homebuyers to purchase a home. While interest rates were low, prices were “out of control,” as lender Charlie Cooper at Austin Capital Mortgage puts it. “It was not uncommon to have 20 to 30 offers. We heard crazy numbers, I mean, 75 offers on a house.”

Cooling prices would suggest that homeownership today is more attainable for middle-class Austinites than a couple years ago, but the reality is more complicated. “With respect to the sheer supply, yes, you could make the argument that it’s a buyer’s market,” said Clare Losey, a housing economist for the Austin Board of Realtors (ABoR). “But we’re now in an environment where a monthly payment is double, essentially, what it was two years ago.”

Bottom line: The cheapest livable homes on the market today are going to cost buyers roughly $3,000 per month, including tax and insurance, Cooper calculated, based on a $350,000 house with a minimum down payment of 3%. Back when these small one- and two-bedroom homes would pull in dozens of offers, interest rates were low enough that a monthly payment (including tax and insurance) would be closer to $2,200 on the same house.

“Then a household could afford a home essentially four times their income. Now it’s three times their income,” Losey said.

So, at ABoR, Losey says they’d consider the minimum annual income to buy a house in Austin around $90,000 to $100,000. With Austin’s median family income for a two-person household at $97,850, that means roughly half of Austin’s population is excluded from the market. Though, Cooper calculates a little lower: He said with assistance programs and low debt, a household making $75,000 (just a little over 80% MFI) could clear enough hurdles, especially if they’re comfortable moving outside of Austin proper.

“We’re now in an environment where a monthly payment is double, essentially, what it was two years ago.”   – Austin Board of Realtors Economist Clare Losey

The city of Austin has two programs that directly help buyers at 80% MFI purchase homes. First is the Austin Community Land Trust, through which the city sells small houses while keeping ownership of the expensive land under them to slash the price to around $200,000. (Available homes are listed online at aclt-homes.org/homes-for-sale.) The second is the Down Payment Assistance Program. Through this, a homebuyer can get up to $40,000 for their down payment and closing costs. In 2023, the city assisted 73 families buying a new home, and 30 of them received down payment assistance.

But with how difficult the market is to enter, these programs may need to be retooled. “Somebody can go through DPA and get qualified, but then the home they’re qualified to purchase, it’s very hard to find that within Austin city limits,” said Taylor Smith, ABoR’s deputy director of government affairs. “So what can we do to reform the Down Payment Assistance Program or add another layer of help? ... It’s a policy conversation that’s at the very beginning, so I don’t have a clear answer.”

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KEYWORDS FOR THIS STORY

Austin Board of Realtors, Housing Department, City of Austin, Clare Losey, Taylor Smith, Austin Capital Mortgage

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