Whilst you don’t fairly want a six-figure wage, it comes shut.

Nashville, TN, is not only the Music Metropolis; it’s additionally dwelling to a thriving actual property market that’s seen vital progress lately. For a lot of, shopping for a house in Nashville is a dream come true, but it surely’s additionally vital to know the way it will influence your funds. From down funds to month-to-month mortgage funds, there’s rather a lot to grasp earlier than shopping for your first dwelling 

So whether or not you already reside in Music Metropolis or want to relocate to the world, right here’s a breakdown of the earnings you’ll have to buy your first dwelling in Nashville.

Take a look at our unique report for an in depth nationwide evaluation.

How a lot earnings do that you must purchase a starter dwelling in Nashville?

The median sale value of a starter dwelling in Nashville is $315,000. As a way to afford this, first-time homebuyers in Nashville ought to make $98,314 per 12 months, up 7% from 2023. Nonetheless, the median earnings in Nashville is $91,252, that means the standard resident typically can’t afford a starter dwelling. 

As anticipated, starter houses in Nashville are rather more reasonably priced than the typical dwelling (all value brackets mixed; see methodology for particulars). As a way to afford any median-priced dwelling within the space, you’ll have to make $124,095 (as of October 2023).

Nationwide, you want an earnings of $75,849 to afford a typical starter dwelling, which prices a mean of $240,000. The typical U.S. family earns an estimated $84,072.

First-time homebuyers’ information to the Nashville housing market

Nashville has seen super progress lately – particularly because the pandemic – as individuals have been searching for sunshine and affordability. In actual fact, town has been amongst the most well-liked migration locations since 2021. This inflow has boosted home costs by practically 30% since January 2021, from $335,000 to $475,000 in April 2024.

The town is dwelling to many world-class facilities situated all through its various neighborhoods. Some standard neighborhoods in Nashville embrace East Nashville, Germantown, and Midtown. From the Parthenon and the Grand Ole Opry to Music Row and the Ryman Auditorium, there are such a lot of nice causes to name Nashville dwelling.

What does a typical down fee seem like for a starter dwelling in Nashville?

Listed below are some frequent down fee quantities for a typical $315,000 starter dwelling in Nashville:

Down funds can vary from 0% to 100% of the whole home value, relying in your price range, mortgage kind, and long-term priorities. Whereas consultants have traditionally really helpful budgeting for a 20% down fee, the rising price of houses and continued sluggish wage will increase has led to a 15% down fee changing into extra frequent. 

Some mortgage varieties 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 typical mortgage is 3%. These quantities sometimes rely in your credit score scores, so consumers with greater credit score scores could qualify for decrease down funds.

What’s the typical mortgage fee for a starter dwelling in Nashville?

The standard month-to-month mortgage fee for a starter dwelling in Nashville is $2,458. This assumes you place 3.5% down and have round a 7% rate of interest.

If this fee sounds too excessive, you possibly can contemplate renting an residence in Nashville. The typical lease value is $1,923, presumably making it a greater possibility when you save for a down fee on a home. You can even use an affordability calculator to see what you may afford based mostly in your earnings and down fee.

What do you have to do subsequent?

In the event you’re available in the market on your first dwelling in Nashville, it’s vital to grasp how a lot home you may afford. Take your annual earnings, credit score rating, the present mortgage charges, and native market developments to decide that works greatest for you.

From there, a Nashville agent may help you navigate the complete dwelling shopping for course of and supply helpful native experience. To study extra about how you can purchase a house, try Redfin’s First-Time Homebuyer’s Information.

Methodology

Redfin defines “starter houses” as houses whose sale value fell into the Fifth-Thirty fifth percentile of the Redfin Estimate tier. For context, Redfin divides all U.S. properties into 5 buckets based mostly on Redfin Estimates of houses’ market values. There are three equal-sized tiers, in addition to tiers for the underside 5% and prime 5% of the market.

We calculated the annual earnings wanted to afford a starter dwelling by assuming a purchaser spends not more than 30% of their earnings on housing funds. Housing funds are calculated assuming the customer made a 3.5% down fee and in addition take a month’s median sale value and common mortgage-interest fee under consideration. 

The nationwide earnings knowledge is adjusted for inflation utilizing the Shopper Worth Index. 2024 earnings is estimated based mostly on projections from the U.S. Census Bureau’s (ACS) 2022 median family earnings utilizing the 12-month shifting common nominal wage progress fee. 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 knowledge sourced February 2024 except in any other case said.