Down Payment Downer

This is how much of your salary it takes for a down payment on a home in Houston

How much of your salary it takes for a home down payment in Houston

House on top of money
Saving for a down payment? It might take a while. Photo courtesy of AmCap

As more and more people move to Texas and home values continue to soar, buyers are having a tough time playing the real estate game. The main impediment is having enough cash for a down payment, which nowadays can deplete even the most well-intentioned savings account.

Why? Because Houston residents looking to buy a home must save a little more than half of their annual salary just for the down payment. That number comes from a new Zillow report, and puts Houston a little below the national average.

As the study points out, there are ways to swing a lower down payment — with an FHA mortgage, for example, which only requires 3.5 percent — but most buyers are looking to take advantage of the best rates and terms, as well as stand out from the heavy competition. That's why 20 percent is still the magic number.

In Houston, that chunk of change translates to around $35,200, based on the Zillow Home Value Index median price of $176,000 for the area. With the median salary for Houston workers hovering around $62,099, that's 57 percent of our yearly earnings we'd need to set aside. Compared to the 67 percent national average, that sounds ... almost not terrible?

Especially when compared to San Francisco and Los Angeles. Many Californians are faced with producing the impossible amount of 111 to 182 percent of their salaries, while New Yorkers get the slight reprieve of only needing 114 percent.

Zillow points out that nearly half of all homebuyers right now are first-timers, meaning "they can't rely on the equity in their current home and must come up with the cash to get into the housing market — often while paying record-high rents."

Elsewhere in Texas, San Antonians are scraping together 56 percent of their $55,796 median salaries, or putting $31,240 toward a $156,200 house. Dallas-Fort Worth residents are putting $40,080 toward a $200,400 home — and a severe dent in their $62,607 salaries, as that's 64 percent.

But it's still not as bad as Austin, where buyers are expected to spend a whopping 82 percent of their salary on a down payment. That's $51,960 out of a median income of $63,389, going toward a $259,800 house.

While none of the 34 cities Zillow examined has an especially low number, there are three cities where you can assemble 20 percent for less than half your yearly salary. Indianapolis; Kansas City, Missouri; and Pittsburgh all offer the tantalizing promise of only 48 percent, with Pittsburgh's median down payment being the lowest at $26,680.