It’s no secret that buying a house is expensive right now. Homebuyers have been hit by a double whammy of high mortgage rates and high home prices. The average 30-year fixed rate was 6. 94% yesterday, and the median home price was $402,502 in December (the latest available data). Put those two figures together and you have a recipe for high housing costs.
Meanwhile, wages haven’t kept up. According to a recent report by Realtor. com, the typical U. S. A family needs to make $118,530 a year to afford the median home, but the median family income is only $77,700. In other words, the typical U. S. household would need a 52% raise to buy the median home. That said, some states are more affordable than others.
Buying a house is an exciting milestone in life However, it also requires careful financial planning With rising home prices and interest rates, you may be wondering – what is a good salary to buy a house these days?
Well, the answer depends on several factors, including your location, lifestyle, debts, and downpayment savings. While there is no one-size-fits-all number, this comprehensive guide examines current income requirements and offers tips to boost your homebuying power.
How Much Income Do You Need to Buy a House?
According to recent studies the typical US household now requires an annual income of around $100000 to $120,000 to afford the median-priced home.
For example:
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Realtor.com analysis shows homebuyers need $116,736 in yearly income to afford a typical US home priced at $354,165 (as of December 2022).
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Bankrate research found that people need to make $116,986 a year to be able to buy the average US home, which costs $418,489 as of January 2025.
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An Investopedia study concluded buyers require household earnings of $118,530 to afford the average US home valued at $402,502 (as of December 2024).
So in most areas, you now need a six-figure income to comfortably afford the typical house. That said, required salaries vary significantly by location.
Income Needed by State
National averages are a starting point, but your state and city have a big effect. Costly states like California and Massachusetts need much higher wages than the Midwest, which is more affordable.
According to the Realtor.com study, buyers needed the highest income in these five states:
- Hawaii: $235,588
- California: $210,557
- Massachusetts: $215,696
- New York: $189,207
- Colorado: $166,370
Meanwhile, the states with the lowest income requirements were:
- West Virginia: $73,327
- Iowa: $82,117
- Ohio: $74,358
- Mississippi: $85,239
- Indiana: $82,427
So, change your expectations based on what home prices and mortgage rates are like in the area you want to live in.
Factors That Determine Your Minimum Salary
Median incomes are a good place to start, but the amount of money you need to buy a house will depend on your unique situation. Consider how these factors affect your budget:
Downpayment – The larger your downpayment, the less you need to borrow. Putting 20% down is ideal, but many first-timers start with as little as 3%.
Debts – Lenders allow up to 36% of your gross income to go toward total monthly debt payments (including the mortgage). So minimize debts before applying.
Mortgage Rate – Today’s rates are almost 7%, compared to 3% two years ago. The higher the rate, the lower the amount you can borrow.
Home Price – Consider cheaper alternatives to the median-priced home, such as condos or fixer-uppers.
Property Taxes & Insurance – Upfront and ongoing housing costs vary by state and community.
Lifestyle – Don’t forget other essentials like food, utilities, transportation, healthcare, and savings.
Tips to Improve Your Homebuying Ability
If your current income seems insufficient to buy, take heart. You can still boost your ability to afford and finance a home.
Increase income – Consider adding a side gig or part-time job to generate extra cash for your downpayment and closing costs.
Reduce debts – Pay down credit cards, auto loans, and other debts to lower your debt-to-income ratio.
Build credit – Aim for a credit score over 740 to qualify for the lowest mortgage interest rates.
Save for a larger downpayment – Putting down 20% instead of 5% cuts your monthly payment by hundreds of dollars.
Look into down payment assistance programs – These programs provide grants or loans to cover a portion of your down payment.
Consider lower-priced markets – More affordable cities can cut your required income by tens of thousands per year.
Start small – Your first home doesn’t have to be your forever home. Consider condos, townhomes, or fixer-uppers.
Wait for a better time to buy – Be patient for lower home prices and interest rates if you don’t need to buy immediately.
Strike a Balance Between Income and Home Price
Ultimately, your comfortable salary threshold depends on striking a balance between earnings and housing costs. While today’s high prices make buying challenging, consider your alternatives if renting also consumes a large chunk of your pay.
Ideally, you should spend no more than 28% of your income on monthly mortgage payments, including property taxes and insurance. Also be sure to budget for maintenance, utilities, and other ownership costs that renters don’t pay.
While buying may require some sacrifices, such as driving an older car or scaling back on vacations, homeownership remains an important way to build long-term wealth. With prudent planning and realistic expectations, buying a home remains possible for many households today.
The Bottom Line
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You now need about $100,000 to $120,000 yearly household income to afford the median-priced US home.
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Required salaries vary greatly by state and city based on local home values and interest rates.
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Factors like your downpayment, debts, credit, and lifestyle impact the income you need.
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Boost your homebuying power by increasing income, paying down debts, saving more, and shopping lower-priced areas.
While today’s housing market presents challenges, homeowners come out ahead of renters in the long run. With patience and preparation, buying a home can still make sense on an average salary in many areas.
Hawaii Is Most Expensive
On the flip side, Hawaii has the most expensive U.S. housing market with a median home price of $800,000 in December. Meanwhile, the state’s average 30-year fixed mortgage rate was 6.92% yesterday. Assuming you put down 20% on the median house, your monthly payment would be $4,818 (including estimated taxes and home insurance).
For that to be considered affordable, you’d need to earn around $192,000 per year, which is over 95% higher than Hawaii’s median household income of $98,317. According to Realtor.com, youd need to earn even more to buy a home in Hawaii: $235,588.
In other words, the Aloha State’s typical house is out of reach for the typical resident, which helps explain the relatively low 62.6% owner-occupied housing rate (West Virginia’s is 74.3%). Even so, you can still improve your ability to buy a house by increasing your income and exploring homes that cost less than average.
According to Realtor.coms report, the next most expensive states where buyers need the highest income to buy a house include:
- Massachusetts: $215,696 (annual median income required)
- California: $210,557
- New York: $189,207
- Montana: $178,017
- Washington: $176,669
- Utah: $173,744
- Colorado: $166,370
- New Hampshire: $165,512
- Idaho: $164,750
Ultimately, homebuyers seeking the most value for their money may want to avoid expensive states and shop in the most affordable ones instead. However, no matter where you want to call home, you can always improve your ability to buy a house by increasing your income, cutting out unnecessary expenses, and getting your finances in order.
Its important to note that the Realtor.com report uses median home prices. While its report uses a mortgage rate current as of December 2024, the rates you see above in our calculations are current as of Jan. 22, 2025, and are analyzed by Investopedia daily. The monthly mortgage payments mentioned above are calculated based on 20% down and the Jan. 22 average 30-year mortgage rate, and they include estimated property taxes and home insurance costs.
| Salary Needed to Buy a House in Every U.S. State, According to Realtor.com | |||
|---|---|---|---|
| State | Salary | State | Salary |
| Alabama | $94,000 | Montana | $178,017 |
| Alaska | $122,211 | Nebraska | $99,831 |
| Arizona | $140,470 | Nevada | $142,369 |
| Arkansas | $85,695 | New Hampshire | $165,512 |
| California | $210,557 | New Jersey | $159,744 |
| Colorado | $166,370 | New Mexico | $114,555 |
| Connecticut | $146,161 | New York | $189,207 |
| Delaware | $141,335 | North Carolina | $117,573 |
| Florida | $127,343 | North Dakota | $103,055 |
| Georgia | $113,495 | Ohio | $74,358 |
| Hawaii | $235,588 | Oklahoma | $85,401 |
| Idaho | $164,750 | Oregon | $161,967 |
| Illinois | $86,122 | Pennsylvania | $87,168 |
| Indiana | $82,427 | Rhode Island | $147,228 |
| Iowa | $82,117 | South Carolina | $103,070 |
| Kansas | $83,549 | South Dakota | $108,930 |
| Kentucky | $88,051 | Tennessee | $124,832 |
| Louisiana | $80,969 | Texas | $105,868 |
| Maine | $129,397 | Utah | $173,744 |
| Maryland | $117,793 | Vermont | $145,770 |
| Massachusetts | $215,696 | Virginia | $121,461 |
| Michigan | $79,128 | Washington | $176,669 |
| Minnesota | $110,403 | West Virginia | $73,327 |
| Mississippi | $85,239 | Wisconsin | $107,769 |
| Missouri | $85,371 | Wyoming | $135,463 |
West Virginia Is Most Affordable
According to the report, West Virginia offers the most affordable U.S. housing with a median home price of $249,000 in December. Meanwhile, the state has an average 30-year fixed mortgage rate of 6.96%. That means you’re looking at a monthly payment of about $1,593 (including estimated property taxes and home insurance), assuming you make a 20% down payment. (You can use a mortgage calculator to figure this out for your dream home.)
For that to be affordable—which the government defines as paying no more than 30% of your gross income on housing—you’d need to be making about $64,000 per year. That’s still over 10% higher than the state’s median income of $57,917, but it’s less of a stretch than what the average U.S. worker faces. And according to Realtor.coms report, youd need to make even more in West Virginia to buy a house there: $73,327.
To lower your homebuying costs, try boosting your credit score to get a lower mortgage rate, saving for a larger down payment, or negotiating better loan terms.
According to Realtor.coms report, the next most affordable states where buyers need the lowest incomes to buy a house include:
- Ohio: $74,358 (annual median income required)
- Michigan: $79,128
- Louisiana: $80,969
- Iowa: $82,117
- Indiana: $82,427
- Kansas: $83,549
- Mississippi: $85,239
- Missouri: $85,371
- Oklahoma: $85,401
How Much Home You Can ACTUALLY Afford (By Salary)
FAQ
Can I afford a $300 k house on a $70 k salary?
Can I afford a $300K house on a $70K salary? If you have minimal debts then a $70,000 salary might be enough to afford a $300,000 house. The size of your down payment and your mortgage interest rate will be important variables. Try to keep your monthly house payments below a third of your monthly gross income.
Can I afford a 250k house on a 40k salary?
To afford a $250,000 house, you typically need an annual income between $62,000 to $80,000, depending on your financial situation, down payment, credit score, and current market conditions. However, this is a general range, and your specific circumstances will determine the exact income required.
Can I afford a 500k house on 100k salary?
At $100K income, you can get an $450K mortgage. You will need a bigger down payment. Work on a budget and see if you can keep up with all the payments. It would be very tight.
Can I afford a 200k house on $50k?
A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $258,000. That’s because your annual salary isn’t the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.