Mortgage Affordability Index by State

How We Calculate the Affordability Index

The AmCalc Mortgage Affordability Index measures how much annual income is required to afford the median-priced home in each state, then compares that to the national average to produce a score where 100 equals average affordability.

Assumptions Used

Calculation Steps

1. Calculate loan amount (median price minus 20% down payment)
2. Calculate monthly principal and interest using 30-year amortization
3. Add monthly property taxes (using state average rates)
4. Add estimated monthly insurance (0.5% of home value annually)
5. Calculate required annual income using 28% front-end DTI ratio
6. Compare to national average to produce affordability score

Score Interpretation

• Score 130+: Very Affordable - Requires significantly less income than average
• Score 110-129: Affordable - Requires less income than average
• Score 90-109: Moderate - Near the national average
• Score 70-89: Expensive - Requires more income than average
• Score below 70: Very Expensive - Requires significantly more income

Data Sources

Median home prices are sourced from Zillow, Redfin, and state housing authorities. Property tax rates are based on state averages from the Tax Foundation. The mortgage rate uses the independently dated observation or illustrative estimate shown above; the index calculation date is not the rate observation date.

Limitations

This index uses statewide averages and may not reflect local market conditions within each state. Housing markets vary significantly between urban and rural areas. PMI is not included as the model assumes 20% down payment. Actual affordability depends on individual circumstances including credit score, debt levels, and local factors.