Why Habitat Montco Does This Work

Posted by Lauren
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By Michelle Spada, Director of Family Services

Median Value of Owner-Occupied Housing in Montgomery County: $292,600

Total Cost of 30-Year Fixed Mortgage at 4.06% for $292,600 Property: $506,541

Monthly Payments for 30-Year Fixed Mortgage at 4.06% for $292,600 Property: $1,407

Median Income of Habitat Family of 4: $36,480

Median Housing Budget for Habitat Family of 4: $851.20 per month

Habitat Montco works with families in Montgomery County who make between 30% and 60% of median income for the county. For a family of 4 in Montgomery County, the median income is $81,100. 30% of median income is $24,300. 60% of median income is $48,660.

Now, let’s look at housing budgets. The usual factor utilized to determine a family’s maximum housing budget is to take 28% of their gross household income. This ratio is used both in the affordable housing field and in the traditional mortgage field. This 28% represents ALL housing costs—principal, interest, insurance, and taxes.

Maximum Housing Budget for Median Income Family of 4 for the County= $1892.33 per month

Maximum Housing Budget for 30% Median Income Family of 4= $567 per month

Maximum Housing Budget for 60% Median Income Family of 4= $1135.40 per month

For the families in Montgomery County making between 30% and 60% of median income, the dream of homeownership is extremely challenging. And to even rent within Montgomery County, many of these families spend over 40% of their income on their rent gaining no equity in their homes.

Habitat’s model of 0% interest mortgages paired with $500 down payments makes homeownership feasible for families that fall within the 30% to 60% range. For families in Montgomery County, monthly Habitat mortgage payments range from $550 to $800 per month including taxes and insurance.

  30-Year Fixed Mortgage at 4.06%         Habitat Mortgage at 0%       
$150,000 House $150,000 House
Total Cost= $254,192 Total Cost= $150,000
5% Down Payment= $7,500 Down Payment= $500
Monthly Payment= $685 Monthly Payment= $417
Does not include taxes or insurance Does not include taxes or insurance