You could make almost $90,000 yearly to afford a starter residence.
Minneapolis, MN, is thought for its beautiful lakes, ample outside recreation, deep historical past, and snowy winters. Along with being a cultural hub and distinctive place to reside, Minneapolis can also be residence to a aggressive actual property market that’s seen a surge in recognition over the previous few years.
For a lot of, shopping for a house in Minneapolis is a dream come true, however it’s additionally vital to know the way it will impression your funds. From down funds to month-to-month mortgage funds, there’s lots to grasp earlier than shopping for your first residence
So whether or not you already reside within the Metropolis of Lakes or need to relocate to the realm, right here’s a breakdown of the revenue you’ll must buy your first residence in Minneapolis.
Try our authentic report for an in depth nationwide evaluation.
How a lot revenue do you should purchase a starter residence in Minneapolis?
The median sale value of a starter residence in Minneapolis is $255,000. With a view to afford this, first-time homebuyers in Minneapolis ought to make $85,013 per yr, up 7.2% from 2023. The median revenue in Minneapolis is $106,561, which means the standard resident can afford a starter residence.
Solely California metros require a better annual revenue to afford a starter residence. Anaheim, Los Angeles, Oakland, San Diego, San Francisco, and San Jose all prime $175,000.
As anticipated, starter properties in Minneapolis are extra inexpensive than the common residence (all value brackets mixed; see methodology for particulars). With a view to afford any median-priced residence within the space, you’ll must make $103,640 (as of October 2023).
Nationwide, you want an revenue of $75,849 to afford a typical starter residence, which prices a median of $240,000. The typical U.S. family earns an estimated $84,072.
First-time homebuyers’ information to the Minneapolis housing market
Minneapolis has skilled a rising however altering market over the previous few years. Home costs have solely risen by 8% since January 2021, from $299,250 to $325,000. Nevertheless, like many cities throughout the nation, the realm has been grappling with a scarcity of properties. Because of this, Minneapolis just lately noticed a gross sales whiplash – residence gross sales hit a 20-year excessive in 2021 earlier than falling to a 12-year low in 2023.
Dwelling costs have considerably adopted this pendulum as properly. Whereas costs haven’t risen a lot total, they’ve seen giant peaks and valleys. For instance, from February 2022 to June 2022, costs rose by 16%. Then, from June to December, they fell by 17.8%. This pendulum swing was seen in lots of metros throughout the nation, usually reacting to altering mortgage charges.
Minneapolis has additionally executed loads of work to satisfy the housing wants of its residents, supplying them with round 3,800 new inexpensive housing models and almost 18,000 complete housing models in 2022. This work continues and is meant to offset the housing deficit from the Nice Recession.
In the event you’re trying to transfer to Minneapolis, the realm is residence to loads of facilities and points of interest all through its numerous neighborhoods. Minnehaha Park, Guthrie Theater, the Chain of Lakes, and the Minneapolis Sculpture Backyard are a number of the most well-known spots, providing waterfront views and enjoyable experiences for individuals of all ages.
Well-liked neighborhoods in Minneapolis embrace Bryn-Mawr, Calhoun Isles, Camden, and Nokomis.
What does a typical down fee appear to be for a starter residence in Minneapolis?
Listed below are some widespread down fee quantities for a typical $255,000 starter residence in Minneapolis:
| Down fee share | Down fee quantity |
| 3% down fee | $7,650 |
| 3.5% down fee | $8,925 |
| 5% down fee | $12,750 |
| 10% down fee | $25,500 |
| 15% down fee | $38,250 |
| 20% down fee | $51,000 |
Down funds can vary from 0% to 100% of the full home value, relying in your funds, mortgage kind, and long-term priorities. Whereas consultants have traditionally advisable budgeting for a 20% down fee, the growing price of properties and continued sluggish wage will increase has led to a 15% down fee turning into extra widespread.
Some mortgage sorts permit for decrease down fee quantities. For instance, a Federal Housing Administration (FHA) mortgage requires simply 3.5% down, whereas the bottom attainable down fee for a standard mortgage is 3%. These quantities sometimes rely in your credit score scores, so consumers with increased credit score scores might qualify for decrease down funds.
What’s the typical mortgage fee for a starter residence in Minneapolis?
The standard month-to-month mortgage fee for a starter residence in Minneapolis is $2,125. This assumes you set 3.5% down and have round a 7% rate of interest.
If this fee sounds too excessive, you would think about renting an condominium in Minneapolis. The median hire value is $1,583, properly under the standard mortgage fee. You may as well use an affordability calculator to see what you’ll be able to afford based mostly in your revenue and down fee.
What must you do subsequent?
In the event you’re out there on your first residence in Minneapolis, it’s vital to grasp how a lot home you’ll be able to afford. Take your annual revenue, credit score rating, the present mortgage charges, and native market traits to decide that works finest for you.
From there, a Minneapolis agent may also help you navigate your entire residence shopping for course of and supply precious native experience. To be taught extra about purchase a house, take a look at Redfin’s First-Time Homebuyer’s Information.
Methodology
Redfin divides all U.S. properties into 5 buckets based mostly on Redfin Estimates of properties’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and prime 5% of the market. Redfin defines “starter properties” as properties whose sale value fell into the Fifth-Thirty fifth percentile of the Redfin Estimate tier.
We calculated the annual revenue wanted to afford a starter residence by assuming a purchaser spends not more than 30% of their revenue on housing funds. Housing funds are calculated assuming the client made a 3.5% down fee and likewise take a month’s median sale value and common mortgage-interest price under consideration.
The nationwide revenue information is adjusted for inflation utilizing the Client Value Index. 2024 revenue is estimated based mostly on projections from the U.S. Census Bureau’s (ACS) 2022 median family revenue utilizing the 12-month shifting common nominal wage development price. The speed was compiled from the Present Inhabitants Survey and reported by the Federal Reserve Financial institution of Atlanta.
We assume housing funds embrace the mortgage principal, curiosity, property taxes, owners insurance coverage, and mortgage insurance coverage (when relevant).
All information sourced February 2024 until in any other case acknowledged. The Minneapolis metropolitan space contains Saint Paul.
