# Calculating Affordability

Affordability is an important factor in any housing market . The ability of the average resident making an average income to become a homeowner is indicative of the reality of living in a place and tells us much about the state of the local economy .
One way to analyze whether homes are affordable in a specific area is to create an index that compares what the median household earns to what it would need for the mortgage on the median price single family home . Our affordability index is calculated by taking the median household income and dividing it by the qualifying income needed to get a mortgage where the payment is no more than thirty percent of your monthly income . The index is calculated under the assumption that the mortgage is a standard 30-year mortgage with a 20 % down payment at current interest rates of the time on a median-priced single family home at the time . The qualifying income is based on how much annual income you would need to be able to pay no more than 30 % of your monthly income would go to your mortgage payment .
( Median Household Income )/( Qualifying Income ) * 100 = ( Index Score ) Ex . 2021 Q2 ( 102,100 )/( 131,742 ) * 100 = 77.5
A score of 100 is the standard score , indicative of a healthy and affordable market , where the median household can comfortably afford the median single family home . An affordability index score of 77.5 means that the median household income , \$ 102,100 based on the most recent statistics , is only 77.5 % of the income required to pay 30 % or less of your monthly income as a mortgage payment , \$ 131,742 . This is indicative of the very high housing prices and cost of living on the island of Oahu , where many residents struggle to be able to afford a single family home .
BERKSHIRE HATHAWAY HOMESERVICES HAWAIĘ»I REALTY
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