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Learning about the Housing Affordability Index (HAI)
When buying a median-priced home for $350,000, at an interest rate of 2.50 percent on a 30-year conventional mortgage and a down payment of 5 percent, the required income to qualify is about $93,616. If you overlay this data point with the Census Median Family income projection of $84,279 for 2020. The buyer of this scenario would be short approximately $9,300 in annual gross income. This roughly translates into a Housing Affordability Index (HAI, referenced in slide 6 of this section) of 90.
In the scenario where the borrower has a 20% down payment, the income needed for the same purchase was $75,014, considered affordable at an HAI of 112.