What’s left after paying that mortgage?

With high gas prices and a housing market still trying to break out of these doldrums, people are trying to save money wherever they can. One technique for achieving financial freedom is keeping a monthly budget and watching your income and spending closely. The first big check that homeowners will write will be the mortgage payment. Fortunately, we’ve recently launched the Zillow Mortgage Marketplace which allows you to find the best mortgage rates for free without any hassle. Just fill out the simple form and wait for the quotes to come in.

After you’ve found those great rates, you’ll be looking at a monthly payment that is proportional to the home value. A very quick rule of thumb I like to use to estimate a monthly mortgage payment is to take the loan amount and divide it by 140. So, a $140,000 loan would have roughly a $1000 monthly mortgage payment. Of course, this is a rough estimate and if you’re looking to get a much more accurate picture of your payment, use our mortgage calculators.

Just as banks look at your income and home price to decide if you are eligible for a loan, you can use the same comparison to see how much money you’ll have left over each month after your mortgage. Here’s a look at what’s left over in the top 30 markets each month. The calculation is simply monthly income (from US census data) - monthly mortgage:

The money leftover after paying the mortgage varies widely across markets. It might come as a surprise that Detroit is high on the list. This probably arises from a combination of factors. First, home prices are very low, so mortgage payments are low as well. The other factor is that Detroit’s high unemployment rate can make the average household income look higher.

As far as general trends, living in California metro areas for the most part leaves you with much less after paying your mortgage. There are many places across the country where people have a lot left over after the mortgage. Atlanta, Houston, Dallas and Washington DC all have a combination of relatively high wages when compared with housing costs and mortgage payments. Don’t be surprised if you see a lot of nice cars around these cities, because people have money to spend on some big ticket items.

Now, let’s take a look at the Median Zestimate compared with dollars after mortgage (click for the larger image):

It’s easy to see the relationship between Zestimates and monthly dollars left after paying the mortgage. Los Angeles and San Diego have high house prices that appear to be out of proportion with income. In the opposite corner we see the southern metro areas that have more affordable housing and plenty of income left over after paying the mortgage bill. It will be interesting to see how this distribution changes over the coming years. Will people start to move back East? Is the California sunshine and beach too nice to leave even with the high house prices? Time will tell.

If you want the raw data for all metro areas here’s the excel file.