For many people, owning a home is a core part of the American dream. However, it’s no secret that real estate prices are on the rise, and despite a slight dip throughout 2022, they still remain financially out of reach for many Americans.
Because of this, aspiring homeowners are looking to save enough money to purchase a $500,000 property. If you’re not sure whether you can reach this benchmark, read on. We’ll break down how much you have to make per year to afford a $500,000 house in many of the top cities throughout South Florida.
What Does a $500,000 Home Look Like in Different Florida Cities?
As the realtor saying goes, location, location, location! Where a house is located is arguably the most important factor that affects its overall price. A $500,000 house can look very different between Miami and Tampa, for example.
Here’s a breakdown of what the average $500,000 property looks like in different Florida cities:
In Miami, Florida, you could potentially secure a $500,000 property like this two-bed, three-bath apartment with 1,950 square feet. It's a relatively spacious unit that has been recently remodeled and located only 10 minutes from the beach. This North Miami apartment would work well for small families or as a rental property..
The median sales prices for condos and townhomes in Miami-Dade was $414,900 in April 2023, which means this property is priced higher than the typical apartment in Miami-Dade. However, this comes at no surprise considering the amenities, water views and close proximity to the beach that the unit offers.
2. Fort Lauderdale
Fort Lauderdale has many popular properties available, including this1,440-square-foot property with three bedrooms and two bathrooms. Located in the heart of Fort Lauderdale, it has been remodeled and has a wide-open floor plan with a private, fully fenced yard.
It’s a great price considering the average price of a home in Fort Lauderdale was $553,000 as of May 2023.
It’s a little expensive relative to the median home sale price for Tampa properties, which is $418,000, but it’s still a good deal considering what’s available.
If you choose to buy in Tampa, you could get a $500,000 home like this three-bedroom, two-bathroom property at 1,320 square feet. It’s in a prime location, just 15 minutes from the downtown area, meaning you can easily walk to a wide variety of bars, restaurants, shops, and galleries from your new home.
Notably, this property is a tad higher than the average house price in the Tampa housing market: $418,000.
5. St. Petersburg
Choose to move to St. Petersburg, Florida, and you could secure a $500,000 property like this three-bed, two-bath property with 1,493 square feet. It has plenty of on-site parking and can work well as a residential property or even a base for a small business you plan to grow in the future.
It’s pricey relative to the average St. Petersburg home price, which is $419,000, which has gone up 5.4% since last year.
Sarasota has lots of amazing $500,000 properties, like this two-bed, two-bath property with over 1,500 square feet. It’s currently under construction but is set to be located in a phenomenal part of town outside Sarasota at Lakewood Ranch. It’s a great pick for future suburbanites and growing families.
Considering that the average Sarasota house price was $495,000 as of May 2023, it's practically a steal since it’ll be in mint condition.
7. Fort Myers
Many $500,000 Fort Myers properties are like this three-bed, two-bath property with nearly 1,600 square feet. Featuring a split floor plan and a large saltwater-filtered pool, it's a perfect pick for those who enjoy the sunshine and swimming frequently. It’s a little pricey compared to the average home price in Fort Myers, which is a bit under $400,000.
Naples has plenty of stellar properties available for half $1 million. With two bedrooms and two bathrooms, this 1,567 square-foot property was recently lowered in price by a few grand, and it features a den, new appliances, and a fully remodeled kitchen.
The Naples housing market is highly expensive, making this an even better steal. The average home price in Naples was $725,000 in May 2023.
Orlando, often considered the jewel of South Florida, has fantastic $500,000 homes. This three-bedroom, two-bath property has over 2,000 square feet, a new roof, and new plumbing. It's also located in a very desirable community called Finn's Cove within Waterford Lakes.
To no surprise, it’s a little pricier than the median home sale price throughout Orlando, which is $360,000 as of May 2023.
Housing expenses are affected by out-of-state transplants. Orlando, Miami, and Tampa are the preferred destinations for people moving to Florida from New York. In 2023, more jobs will be available in Florida than in New York. The influx of tech and finance workers has affected how much house others can afford as these high-earners can shell out more for property.
How Much Do You Have To Make a Year To Afford a $500,000 House?
With the median home price steadily increasing, many home buyers are finding themselves in the market for a $500,000 home. The income you need to qualify for a $500k purchase can vary depending on interest rate, down payment as well as where you plan to buy having an impact on property taxes and insurance requirements.
Using Vaster's mortgage calculator can help you get a better idea of what income you will need to afford a $500,000 home in 2023. For our example we will be assuming the following:
Down payment is 20%
Interest rate is 7.5% for 30-year fixed rate mortgage
Annual property taxes is 2% of purchase price
Annual hazard insurance premium is 0.7% of loan amount
With the above factors incorporated, your monthly housing expense will be $3,864, this equals to $46,368 per year on principal, interest, taxes, and insurance. Using the common rule of thumb that you should not spend more than a third of your income on housing, we will multiply this figure by 3. Therefore, the annual salary needed to afford a $500,000 dollar home is $139,104.
Other Factors To Consider When Determining Home Affordability
Of course, your household income is only one of the key elements to consider when determining whether you can afford a given property. Truth be told, there are several other financial factors to think about before signing on the dotted line for any mortgage loan.
Naturally, the debt under your name will impact not only your ability to pay for a $500,000 home mortgage but also whether you'll get approved for such a mortgage in the first place.
The lower you can get your debt, the better — it'll make it easier for you to pay your monthly mortgage bills and make you more likely to get a stellar loan with low-interest rates.
2. Credit Score
Credit scores have a similar impact as DTI ratios. The higher your credit score, the more lenders will be willing to give you a loan for $400,000 or more, depending on your initial down payment amount.
To buy a $500,000 home in Florida, try to have a credit score of at least 640, although 700 or above is even better. That shows you have good credit and can be trusted with high-value loans since you regularly make your credit card payments and don’t overspend.
If you have student loans, car loans, or unpaid child support, take care of those debt payments as soon as possible. You’ll have an easier time achieving homeownership and possibly get better private mortgage insurance (PMI) rates this way.
3. Interest Rates
Don't forget to consider the interest rate with a $500,000 home loan. Higher interest rates mean you'll pay more over the loan's lifespan. Making a larger down payment or lowering your DTI can increase your chances of securing a better interest rate.
4. Property Taxes
Then there are property taxes, which you must pay each month into an escrow account. These taxes pay for things like schools, parks, and other local services you use. Florida’s average annual property tax is roughly 1-2% of your home’s value (although this can change by county). If you have a $500,000 home, expect to pay about $416 per month.
Lastly, remember that HLA (homeowner’s association) and CDD fees are part and parcel of many of the best Florida property communities. These cover things like HOA services and amenities, pools, parks, and so on.
Florida has more HOAs than any other state in the country, with the average monthly HOA fee clocking in at $389. Include the HOA payment in your housing costs calculation to ensure you can afford the whole picture.
Finance Your $500,000 House With Vaster
As you can see, there are lots of stellar $500,000 properties throughout the Florida real estate market. However, the path to unlocking your Florida dream property starts with getting pre-approved.
That’s where Vaster can help. Our knowledgeable, experienced loan officers can help you find the perfect home loan for a $500,000 house once you contact us today. Work with us, and you’ll get the financing solution that's catered to your needs and financial situation. Discover your personalized loan options today and get started on finding your dream home.