Chris  Schmidt
Chris Schmidt
Owner/Broker

How Much House Can I Afford in Houston?

Buying a home is one of the biggest financial decisions you’ll make. As you start your home search in Houston, it’s crucial to understand what you can realistically afford based on your income, debts, and savings. This will help you avoid getting in over your head and ensure you can comfortably make your mortgage payments.  In this blog post, Chris Schmidt and the real estate experts at Your Home Sold Guaranteed Realty - Chris Schmidt Team will examine how to determine how much house you can afford in Houston.

Key Takeaways:

  • Aim for total monthly housing costs under 28-33% of your gross income
  • A 20% down payment helps avoid private mortgage insurance (PMI)
  • Consider your overall debt-to-income ratio, keeping it under 43%
  • Houston offers affordable options across neighborhoods like Aldine, Alief, and Northwest Houston

Be sure to read our Guide: Mortgage Loan Process | A Guide for Houston Homebuyers

Estimating Your Monthly Housing Budget

A general guideline is to keep your total monthly housing costs (mortgage payment, property taxes, homeowners insurance, HOA fees, etc.) below 28-33% of your gross monthly household income. This percentage helps ensure you don’t become “house poor” and can still cover other essential expenses.

So if your total household income is $6,000 per month, you’d want to aim for housing costs under $1,980 (33% of $6,000) at the highest end. Use a mortgage calculator to estimate payments based on your target home price, down payment amount, interest rate, and other factors.

The Importance of Your Down Payment

The more you can put down upfront towards your home’s purchase price, the lower your ongoing monthly payments will be. A down payment of at least 20% allows you to avoid paying private mortgage insurance (PMI), which can add $100-$300 to your monthly payment.

However, there are loan programs available for lower down payments, such as:

  • FHA loans: 3.5% down
  • VA loans: 0% down for eligible military/veterans 
  • Conventional loans: 3-5% down (with PMI)

So don’t feel discouraged if you can’t save a full 20% down payment right away. Just know that a higher down payment does make homes more affordable in the long run.

Your Overall Debt Picture

Beyond just your mortgage payment, lenders evaluate your overall debt-to-income ratio when approving loans. They generally want your total monthly debt payments (including the new mortgage, credit cards, auto loans, student debt, etc.) to consume no more than 36-43% of your gross monthly income.  

So if your total household income is $6,000/month, you’d likely want to keep your combined monthly debts below $2,580 (43% of $6,000). Ensure you factor in daycare/childcare costs, car payments, minimum credit card payments, and any other significant recurring debt when calculating this.

What are Average Home Prices in Houston?

According to various online real estate sources, the average home price in Houston varies slightly across different sources, but generally falls within the range of $270,000 to $350,000.

Specifically:

  • Zillow reports the average home value in Houston as $271,943 as of April 2024. 
  • Realtor.com states the median listing home price in Houston was $340,000 in April 2024.
  • RocketHomes reports the median home sold price in Houston was $315,136 in April 2024.
  • NoradaRealEstate.com mentions the single-family average price in Houston rose 4.1% to $400,252 in their latest data. 

So while there is some variation, most sources indicate the average/median home price in Houston is currently between $270,000 to $350,000, with the most commonly cited figures being around $315,000. The exact number can fluctuate based on the data source, time period, and whether looking at listing prices or sold prices.

Be sure to read: What is the best home value estimator? and How Accurate Are Zillow Estimates?

What is the Average Home Price in Different Communities of Houston?

Based on the data provided in the search results, here are the median/average home prices for different neighborhoods in Houston:

Median Home Prices by Neighborhood

  • 1960/Cypress (77065): $225,000
  • Aldine Area (77073): $174,990  
  • Alief (77072): $190,000
  • Alvin North (77583): $287,879
  • Alvin South (77511): $224,686
  • Atascocita North (77346): $217,250
  • Atascocita South (77346): $237,912
  • Bacliff/San Leon (77518): $210,000
  • Baytown (77520): $195,000
  • Bellaire (77401): $1,150,000
  • Clear Lake (77059): $300,000
  • Conroe (77304): $275,000
  • Cypress (77433): $300,000
  • Deer Park (77536): $235,000
  • Downtown (77002): $425,000
  • East End (77011): $250,000
  • Friendswood (77546): $375,000
  • Galveston (77550): $325,000
  • Garden Oaks/Oak Forest (77018): $450,000
  • Heights (77008): $625,000
  • Katy (77449): $325,000
  • Kingwood (77345): $325,000
  • League City (77573): $325,000
  • Memorial (77024): $975,000
  • Montrose (77006): $550,000
  • Northwest Houston (77088): $195,000
  • Oak Forest East (77018): $450,000
  • Oak Forest West (77092): $289,150
  • Pearland (77584): $277,500
  • River Oaks (77019): $2,000,000
  • Spring (77379): $275,000
  • Sugar Land (77479): $400,000
  • The Woodlands (77380): $475,000
  • Tomball (77375): $300,000 

So the median/average home prices range widely across Houston’s many neighborhoods, from under $200,000 in areas like Aldine and Northwest Houston, to over $1 million in affluent areas like River Oaks and Memorial. The data highlights the diversity of housing markets within the Houston metro area.

Where Are Homes for Sale in Houston Under $200,000

So if you’re looking for an affordable starter home under $200,000, you’ll likely want to focus your search on areas outside Houston’s central core like Aldine, Alief, Bacliff/San Leon, Baytown, and parts of Northwest Houston.

The Houston real estate market offers excellent options across a wide range of price points. By getting pre-approved for a mortgage, understanding your monthly budget, and zeroing in on affordable neighborhoods, you can find your dream Houston home without overextending yourself financially.

How Much House Can I Afford – Affordability Calculator

This interactive tool will let you calculate precise monthly payment estimates based on your income, down payment savings, and current mortgage rates. However, to accurately assess how much house you can afford, it’s advisable to consult with a financial advisor or mortgage professional who can analyze your specific financial situation and provide guidance on a realistic home purchase budget.

Change the figures below to meet your circumstances:

By understanding the various costs associated with homeownership and creating a comprehensive budget, you can better prepare for the financial responsibilities of owning a home. Remember, proper planning and budgeting can help ensure a smooth and sustainable homeownership experience.

Call or Text Chris Schmidt Today to Get Your Mortgage Loan Process Started!

Your Home Sold Guaranteed Realty - Chris Schmidt Team. How Much House Can I Afford in Houston?
Chris Schmidt

Chris Schmidt is the owner of Your Home Sold Guaranteed Realty - Chris Schmidt Team. Chris has 20+ years of experience in real estate and is deeply familiar with the Houston housing market. He’s a member of the Houston Association of Realtors and has earned the Graduate, Realtor Institute designation from the National Association of Realtors.

He began his real estate career in 2004, when he joined Coldwell Banker United as a broker associate. He worked as a broker associate for over 10 years before deciding to begin his own real estate and mortgage lending team.

If you work with Chris Schmidt and the agents at Your Home Sold Guaranteed Realty - Chris Schmidt Team, you’ll have nothing to worry about on your home purchase or sale of your home. We’ve received numerous 5-star reviews from past clients who loved working with us. Clients value working with our team because we always take the time to understand their real estate goals and learn about what’s most important to them.

To Discuss Your Home Sale or Purchase, Call or Text Today and Start Packing!