Burt Polson

J.L. Sousa/Register Burt Polson writes the Real Estate in the Napa Valley column for the Napa Valley Register.

J.L. Sousa/Register

If you pay more than 30 percent of your income for housing, you are burdened, according to the federal Department of Housing and Urban Development (HUD).

In Napa, a nice three-bedroom home is available for rent at $3,000 month and will cost you around $8,000 to move in. In order to purchase a similar home, you will need to spend $660,000.

To be a renter of an average home in Napa and not be considered “burdened” you would need to have an annual income of $120,000.

To purchase the same home with an Federal Housing Administration (FHA) loan, you would need to have income approaching $127,000 year and a down payment of almost $23,000. A great program if you can stretch to living on $76,200 a year for all other living expenses.

According to Scott Whitlock of FirstCal, a local mortgage company, this purchase would fit well for an FHA loan, which allows for up to 40 percent of your income to go toward housing costs.

I find it interesting that HUD, who oversees the FHA loan program, would allow for a 40 percent debt-to-income ratio even though they consider housing costs over 30 percent a “burden.”

For $125,000, you can purchase a similar home in Waco, Texas where one of my favorite home shows, “Fixer Upper,” is based.

I have to admit I oftentimes experience moments of anguish when I consider how far my housing dollar will go there compared to Napa.

The FHA loan program can also be used in Waco and allows for a home price of up to $227,665 compared to $636,150 for Napa, according to Whitlock. There is no comparison of a home in Waco valued at the FHA loan maximum to that of a home for the maximum in Napa.

A home in Waco for sale at $225,000 would be similar to a $950,000 home in Napa!

You would think there would be more consistency of the FHA loan maximum for your standard “plain vanilla American dream home,” but there isn’t.

If you decide Waco is the way to go, you will need a down payment of $4,375; your total payment with taxes and insurance will be around $800 a month.

I am not going to go into the fact that some of us who may have owned their home for several years in Napa could probably sell their home and pay cash for a home or two in Waco, Texas.

Your annual income needed to not be “burdened” in Texas will need to be around $32,000. Even less if you use the FHA standards.

OK, I will admit the average property tax rate is more there than here—about double — but the housing prices are 25 percent less.

The similarities between the two cities are many.

Why does living in Napa take such a larger percentage of income than Waco?

We will explore “why” next time.

Burt M. Polson, CCIM, is a local real estate broker specializing in commercial, luxury estates and wineries. Reach him at 707-254-8000, or burt@acresinfo.com. Sign up for his email newsletter at BurtPolson.com.