How much do I need to make to buy a house in Philadelphia?

It’s less about salary and more about the cost of the home you want to buy, the mortgage rate you’re able to secure, the amount of savings you have in the bank and the amount of other debt you have (also known as your debt-to-income ratio , or DTI). The median home price in Philly is $255,000, per Redfin. Start with a down payment and monthly mortgage costs, then factor in closing costs, the cost of upkeep and and an emergency fund for unexpected surprises. Can your salary carry that, plus your everyday food, commuting and lifestyle expenses? If so, then you can comfortably afford a house.

How much is a down payment on a house in Philadelphia?

The median home price in Philly is $255,000, per Redfin. A typical 20 percent down payment on that would come to $51,000. However, the amount you have to put down depends on what kind of mortgage you get: Many loans require a far lower percentage, and if you qualify, some don’t require any down payment at all. Remember, though, that the more you put down upfront, the less you’ll have to pay back to a lender (and thus, the less interest you’ll have to pay).

Buying a house in Philadelphia

Written by

Mia Taylor,

Edited by

Michele Petry

Published on April 27, 2023 | 7 min read

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Philadelphia skyline, showing a variety of building.

The City of Brotherly Love is a place rich with history. It’s also Pennsylvania’s largest city, and its real estate market is largely returning to normal after the pandemic caused home prices to skyrocket around the country. Home shoppers in Philadelphia will find a market where prices are down 3.8 percent year-over-year as of March 2023 and the median price for a home is about $255,000, according to data from Redfin. That’s significantly less than the National Association of Realtors’ nationwide median of $375,700. If you’ve set your sights on becoming a Philly homeowner, here’s what to know.

Deciding where to live in Philadelphia

Whether you want a peaceful, quiet enclave or a neighborhood full of culture, entertainment and nightlife, there are plenty of options in Philadelphia. The up-and-coming community of Grays Ferry is a popular choice for the budget-conscious, while the vibrant gastronomy, art and music scenes in the Fishtown neighborhood attract cool, creative types. Other well-regarded neighborhoods include Passyunk Square, Northern Liberties, Queen Village and upscale Society Hill. Each neighborhood offers its own unique set of pros and cons.

While deciding where to live within a city often comes down to some combination of available housing stock, distance from workplaces and schools and proximity to friends and family. If you’re coming to the city from out of town, be sure to compare its overall cost of living to the city you currently live in. You’ll need to know how much you can expect to spend on essentials like travel and food as well as the cost of housing.

How to buy a house in Philadelphia

Saving for a down payment

It’s long been a general rule of thumb that homebuyers should be prepared to provide a 20 percent down payment. For a median-priced $255,000 home, that amounts to more than $50,000 upfront. Saving a chunk of money that large can be challenging, and there are many programs designed to help buyers cope financially — especially if you’re a first-time homebuyer. These assistance programs can be available at the federal level, through individual lenders and at the local level through the state of Pennsylvania. Often, they will provide a loan, grant or matched savings to help with down payment and closing costs.

Of course, your specific down payment will depend on the type of mortgage loan you choose, the cost of the home you want to buy in Philadelphia and your financial profile. Many types of mortgage loans do not require a full 20 percent down, and there are even some that require no down payment at all.

Find the right lender and get preapproved for a mortgage

Before you start house-hunting, be sure to get preapproved for a mortgage. Getting preapproved helps you understand how much home you can afford by telling you how much a lender is likely to loan you. It also lets sellers know you are a qualified buyer who is serious about making a purchase and not “just looking.”

Once you’re ready to make an offer on a Philly home, you’ll apply for an actual mortgage, not just preapproval. You can use the same lender that preapproved you, but you’re not obligated to — it’s smart to shop around and compare different lenders’ rates and services before you commit to one.

Find the best local agent

Finding a real estate agent who knows the Philly market well is another important step in navigating the homebuying process. A local agent who is fully immersed in the city’s market dynamics can not only help you find homes that fit your budget and lifestyle, but also provide expert advice when it comes time to make an offer and negotiate a deal.

To find a great agent, ask friends, family and colleagues if they know of anyone they’d recommend. It’s also worth checking out online listings in your desired neighborhood — the Realtors handling those listings may be able to help you, too. Interview two or three agents and research their online reviews from past clients before signing a contract to work with someone.

Start house hunting and make an offer

With a preapproval letter in hand and an agent at your side, you’re ready to start looking at houses. Be honest with your agent about what you’re looking for and how much you can spend — the more they know, the better they can help you find options that meet your needs. And be open-minded: If the agent finds a place that checks all your boxes but is not in your preferred neighborhood, it may still be worth seeing. Let their expertise work for you.

When you find a place you love, your agent will be a key advisor in helping you make the best offer possible. Philly homes currently spend an average of 57 days on the market, per Redfin data, which is 18 days longer than a year ago. In addition, 31 percent of homes are dropping their price before they sell. So you have some leverage as a buyer; your agent will help you make a competitive offer and seal the deal to your best advantage.

Get a home inspection and appraisal

Gone are the days of needing to waive inspections amid a hyper-competitive market in order to land a home. After your offer is accepted by a seller, be sure to schedule a home inspection. This will uncover any issues with the property that might impact your decision to buy — or that you may want to ask the seller to address, either by making repairs or offering concessions.

In addition, if you’re purchasing a home with a mortgage, your lender will require a home appraisal. This means a professional appraiser will visit the home to assess its value. It’s a security measure — the lender doesn’t want to offer up more money than the home is worth.

Requirements to buy a house in Philadelphia

Can I afford a house in Philadelphia?

Despite the fact that Philadelphia is a major city, home prices here are lower than many other parts of the country. As of March 2023, the median sale price for a home was $255,000, per Redfin — that’s more than $120,000 less than the national median. Prices are down 3.8 percent from March of last year, and homes are spending longer on the market as well. All of these factors can make homes more affordable if you’re a buyer.

Still, deciding whether you can afford a home in Philadelphia will come down to personal factors including your income level, debt level and lifestyle. It will also depend on the interest rate you qualify for and how much of a down payment you can bring to the table.

Here’s a quick example of how much a home in Philadelphia may cost. According to Bankrate’s mortgage calculator, based on the median price of $255,000 and a 20-percent down payment on a 30-year fixed-rate mortgage with an interest rate of 6.7 percent, your monthly mortgage payment (not including property taxes, insurance and other fees) would be about $1,316.

First-time homebuyers in Philadelphia

If you’re a first-time homebuyer, be sure to investigate the many government programs available to make a purchase more accessible. These provide financial assistance with down payments and closing costs. Some lenders also offer discounted mortgage interest rates for qualifying first-time buyers. Take the time to research the options available to you, as they could make your home purchase far less costly.

FAQs

It’s less about salary and more about the cost of the home you want to buy, the mortgage rate you’re able to secure, the amount of savings you have in the bank and the amount of other debt you have (also known as your debt-to-income ratio, or DTI). The median home price in Philly is $255,000, per Redfin. Start with a down payment and monthly mortgage costs, then factor in closing costs, the cost of upkeep and and an emergency fund for unexpected surprises. Can your salary carry that, plus your everyday food, commuting and lifestyle expenses? If so, then you can comfortably afford a house.
The median home price in Philly is $255,000, per Redfin. A typical 20 percent down payment on that would come to $51,000. However, the amount you have to put down depends on what kind of mortgage you get: Many loans require a far lower percentage, and if you qualify, some don’t require any down payment at all. Remember, though, that the more you put down upfront, the less you’ll have to pay back to a lender (and thus, the less interest you’ll have to pay).