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Doing Your Own Paycheck to Paycheck Analysis

Step-by-Step Instructions

Step 1: Collect Data

Step 2: Calculate Homeownership Affordability

Step 3: Calculate Rental Affordability

Step 4: Create Charts

Step 1: Collect Data

The first step is to collect data on the costs of buying or renting a home, as well as the salaries of workers in your community.  Below are suggestions on sources for obtaining the needed information.

Homeownership
a. Home Purchase Prices: Use median or a range of prices

• Local Realtors for existing homes from the local multiple listing service
• Homebuilders for prices of new homes
• Advertised units in local papers

b. Interest Rates:

• Area Lenders
• Go to the Federal Home Finance Board website www.fhfb.gov and click on the Mortgage Interest Rate Survey (MIRS) by metropolitan area

NOTE: If the downpayment is less than 20 percent, add 45 basis points to cover the costs of mortgage insurance.

c. Property Taxes & Property Insurance: Express as monthly cost

• Tax rates from local assessor’s office or local government website
• Insurance from local insurance reps
• OR estimate monthly amount for both items by multiplying the home price by a number ranging from .0015 (low-cost area) to .0025 (high cost area).

Rental Affordability
Rents: Add utility costs, if applicable

• Consult area landlords
• Advertised units in local papers
• Government’s “Fair Market Rents” – found at www.huduser.org/datasets/fmr.html

Salaries & Wages
Wages: Can be annual or hourly

• Chamber of Commerce
• Individual local employers
• Advertised jobs in local papers
• Government’s Occupational Earnings and Wage Estimates by metro area www.bls.gov
• Commercial data by metro area and zip code – www.salary.com

Step 2: Calculating Homeownership Affordability >>