Archive for Sunday, August 24, 2003

Affordability test: Income, debt play big roles in qualifying for loan

August 24, 2003


Opinions are mixed on whether the rising price of homes in Lawrence is pushing people out of the market. Here's a look at a handful of hypothetical people and whether they could afford the average-priced house in Lawrence. For July, the average sale price for homes in Lawrence, not including North Lawrence, was $168,452 according to the Douglas County appraiser.

For Shawnee County, the average price was $118,512. In Jefferson County, it was $103,667.

The calculations assume each person has about $8,000 in savings, or enough to put down about a 5 percent down payment on the average Lawrence home.

All calculations are based on a calculator program found at and assume an interest rate of 6.625 percent, which is near the current average rate in Lawrence.

  • The average Lawrence family: The average Lawrence family -- which in 2002 had an income of $56,000, according to the Department of Housing and Urban Development -- would qualify for the average Lawrence home quite handily. According to the mortgage calculator, the family could afford a home selling for $177,000.

But if the family is carrying the average amount of credit card debt -- estimated to be $8,000 by, a Web site that monitors the credit card industry -- they can forget about the average Lawrence home. Instead, they would have to settle for a home selling for $143,500 or less.

¢ The first-year Lawrence public school teacher: A rookie teacher for the Lawrence public school system, who makes an average salary of $26,825, would fall well short of being able to buy the average Lawrence home. The teacher, if he or she has no debt, would qualify for a home selling for $91,115.

With average credit card debt, the teacher would qualify only for a $25,381 loan.

  • The average Kansas University professor: With an average salary of $84,600, the professor can do much better than a humble abode in Lawrence. The professor would qualify for a $273,150 home. With average debt, the sale price would fall to $259,400.
  • A worker earning a proposed living wage: City commissioners are considering requiring companies that receive tax abatements to pay all their workers a living wage of at least $9.53 an hour. In Lawrence, that wage wouldn't come close to allowing workers to live in the average-priced home. Instead, the worker would have to find a home for $69,000 or less.

But if the worker was carrying average debt, he or she probably wouldn't qualify for a loan at all, according to the calculator.

Commenting has been disabled for this item.