As spring breezes in, more and more people will pour into the housing market trying to find their own little piece of paradise. These buyers will juggle budget and lifestyle priorities, trying to find a house they’ll both love and can realistically afford long term.
You may be surprised by what $3,500 per month will buy in a lot of markets, especially if you’re able to telecommute.
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How Much Can You Spend with a $3,500 Per Month Mortgage?
A $3,500 per month mortgage in the United States, based on our calculations, will put you in an above-average price range in many cities, or let you at least get a foot in the door in high cost of living areas. That price point is $550,000. With an average first-time homebuyer’s 6% down payment on a 30-year fixed-rate mortgage at 7.14%, your principal and interest payment will be right in the ballpark.
Additional fees may apply to your mortgage, including homeowners insurance, mortgage protection insurance, property tax, homeowner association dues, additional insurance coverage, like for floods or wind, and additional assessments that may temporarily be part of your HOA. However, these fees aren’t present with every mortgage.
What Does a $3,500 House Look Like?
In most parts of the country, for $3,500 a month you can find above average homes that are often sold more on collective amenities than the home’s own features. For example, in the Dallas-Fort Worth metropolitan statistical area (MSA), you can get a 2,600-square-foot, two-story, four-bedroom home with two living areas that’s less than 15 years old for $550,000, according to Cindy Allen, real estate agent at DFW Moves in Southlake, Texas.
But that’s not where this house shines. In Texas, you’re definitely going to be buying the neighborhood as much as the house itself.
“You are going to have a community pool that includes a water park and a splash pad for the little kids,” Allen says. “You’ll also likely get a trail system, a couple of pocket parks, you might get a dog park, as well as a community center where you can gather for neighborhood events or rent out for things like birthday parties. It will probably have a weight room-exercise type center in it.”
In the suburbs of Chicago, on the other hand, you’ll be looking at a very different house in safe and long-established neighborhoods without HOA-specific amenities.
“Homes that are $550,000 are not going to be new, they’re going to be fixed-up versions of older homes from the 1950s and 1960s,” says Patrick Roach, president and managing broker at Southwestern Real Estate, in Wheaton, Illinois. “But they’ll have been remodeled within the last 10 years.”
Roach says homes in this price range are highly variable in his market, with some homes that have been more recently and more completely remodeled in the 1,400- to 1,600-square-foot range, and others that are livable, but not completely up to date, closer to 2,500 square feet.
In Tampa, Florida, it’s much harder to find a $3,500-a-month house, but if you don’t mind venturing to the suburbs and having a short drive into the city, there are options.
“If you go out to the suburbs and get 25 to 30 minutes from downtown Tampa, you’re gonna get a house with a one car garage, three bedrooms, two baths, and around 1,900 square feet of living space,” says Katie Glaser, real estate agent at Smith & Associates Real Estate in Tampa.
Glaser says these homes, while only about 15 years old, have had some remodeling, but may still need minor updating to make them feel brand new.
[What Kind of House Can You Buy for $2,500 a Month?]
Making $3,500 Possible in High-Cost Areas
The good news about $3,500 homes is that they can easily be found almost anywhere in the country, excluding areas with the most expensive cost of living. Even in those areas, a $550,000 home is often not difficult to secure in an outer ring suburb, or the equivalent.
However, even in the highest cost of living areas, you may be able to secure some type of housing, although it won’t be a single-family home. In places like Manhattan, according to Andrea Saturno-Sanjana, real estate broker with Coldwell Banker Warburg in New York City, you’ll find the best bang for your buck by buying into a co-op, which looks a lot like a condo, but operates more like a business.
Co-ops are small apartment buildings or a small cluster of buildings that are owned cooperatively between all the apartment occupants, and instead of having a deed to your apartment, you get shares in the cooperative and a lease specific to your unit.
Saturno-Sanjana says most of the co-ops you’ll find in Manhattan, Queens and Brooklyn are historical structures that date back to the 1920s through 1940s, but there are a few newer cooperatives if you’re patient. Her secondary market is Washington, D.C., where she says co-ops are also common.
[Condo vs. Townhouse vs. Co-Op: Which Is Right for You?]
Advice for $3,500 Homebuyers
Finding and securing a $3,500 home right now isn’t the challenge that it has been, according to real estate agents. This price range in a lot of markets is sufficiently high to reduce the competition significantly, but even where it’s not way above the average sales price, bidding wars are less common.
Still, there are a few things you should keep in mind.
Roach says it’s important to trust your agent to understand the nuances in the local market, wherever you are. They can easily tell you which properties you can go home and think about, and which you need to make an offer on right away, for example. And in those urgent cases, open communication and trust matter.
“There are going to be situations where we find a great house that just hit the market and the buyer is going to have to go big if they want to win over other offers,” says Roach. “This is when they have to really consider how bad they want that particular property. This is one of those situations where you have to put it all in to the degree that you love the house, and if you don’t love it that much, you can’t expect to get it.”
Glaser warns buyers to not have locked-in expectations right out of the gate. It’s better to figure out what you want the most and prioritize each of those things, rather than to insist on a home that has them all.
“First, consider the most important things that you’re looking for in a house so we can find those things, because you won’t find everything,” says Glaser. “Really take the opportunity to take some time to think about it before you’re ready to pull the trigger so that when you find that house you’re ready to go.”
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What Kind of House Can You Buy for $3,500 a Month? originally appeared on usnews.com
