Is it true that Florida Residents Can’t Afford Their Homes Based On Income And Home Prices? With homes at record prices and interest rates creeping up, how have home buyers done this year when it comes to staying within the 28/36 rule?
First, what is the 28/36 rule? The 28/36 rule is essentially your debt to income ratio (DTI). Using this means that your mortgage payment shouldn’t be more than 28% of your monthly pre-tax income and 36% of your total monthly debt.
To calculate your DTI, divide your income by the sum of your mortgage, interest, HOA payment, insurance, and property taxes. If the figure is above 28%, you run the risk of being house poor. And with Florida home prices, that can happen quickly. Data provided by Wealthcare Financial.
The study finds:
Florida’s average two-person household income ($121,522) does not allow prospective buyers to afford the average home price, $597,718
The average Floridian looking to buy a new home will likely be 13% over the debt to income ratio (DTI) and therefore be unable to qualify for a home loan
Homeowners’ insurance is $1,338 more than the national average in Florida, which is increasing the unaffordability of Florida homeownership