A sold sign stands outside a home in Wyndmoor, Pa., on June 22, 2022. Two recent studies suggest that prospective homeowners will have to earn more than $100,000 annually to afford a typical home in much of the U.S. Matt Rourke/AP hide caption
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Matt Rourke/AP
A sold sign stands outside a home in Wyndmoor, Pa., on June 22, 2022. Two recent studies suggest that prospective homeowners will have to earn more than $100,000 annually to afford a typical home in much of the U.S.
Matt Rourke/AP
You've heard that it's a tough time to buy a house, but exactly how tough is it?
A pair of recent studies predicts that you'd need to earn more than $100,000 per year to comfortably afford a typical home in much of the U.S. right now.
That's a major jump from just four years ago, and it comes at a time when fewer homes are on the market and mortgage rates and housing prices have been high. House hunters, meanwhile, haven't seen their wages increase at the same pace.
"Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains," Zillow senior economist Orphe Divounguy said in a statement.
The six-figure threshold
A Zillow analysis released in February found that prospective homeowners would have to earn more than $106,000 annually to be able to buy a typical home in the U.S.
That's an 80% increase from the $59,000 yearly income the website predicted a household would need to comfortably afford a home in 2020.
In a separate study released Monday, the financial website Bankrate suggested Americans would have to rake in $110,871 per year to afford a median-priced home, which the outlet says costs $402,343. That income level surged nearly 50% from its 2020 estimate.
"Home values are near record highs, and if you want a house, you have little choice but to pay a high price," Bankrate housing market analyst Jeff Ostrowski said.
The national median household income, according to data from the U.S. Census Bureau, is around $74,500.
Location, location, location
Of course, those figures are based on national data, and home prices vary depending on where you want to live.
Bankrate found that aspiring homeowners in 22 states and Washington, D.C., should earn at least $100,000 per year to afford a typical home. Buyers in the South and Midwest require less to pay for new digs than those in the West and Northeast.
Still, the 22 states requiring a six-figure income is an increase from the only six states (and D.C.) where that much money would have been necessary to buy a typical house in 2020.
The states that saw the largest increase in the annual income necessary to buy a typical home were Montana, Utah, Tennessee, South Carolina and Arizona.
In Seattle, New York City, Boston and four major metro areas in California — San Jose, San Francisco, Los Angeles and San Diego — prospective households would have to earn more than $200,000 per year to afford a typical home, according to Zillow.
Memphis, Cleveland, New Orleans and Birmingham were among the most affordable cities.
But Zillow found only three major metro areas in the U.S. where homebuyers making the median income could afford a typically priced home: Pittsburgh, St. Louis and Detroit.
FAQs
Today, you need to earn at least $100,000 just to afford a “typical” home, according to a new analysis. Data tracked by the Federal Reserve Bank of St. Louis shows the average sales price for homes sold in the U.S. was $492,300 last quarter, down from $552,600 a year prior.
How much can I afford for a house if I make $100000 a year? ›
On a salary of $100,000 per year, as long as you have minimal debt, you can afford a house priced at around $311,000 with a monthly payment of $2,333. This number assumes a 6.5% interest rate and a down payment of around $30,000. The 28/36 rule is often used as a guide when deciding how much house you can afford.
What percentage of Americans have a household income over $100000? ›
Percentage distribution of household income in the United States in 2023
| Annual household income in U.S. dollars | Percentage of U.S. households |
|---|
| 75,000 to 99,999 | 12.1% |
| 100,000 to 149,999 | 17% |
| 150,000 to 199,999 | 9.5% |
| 200,000 and over | 14.4% |
5 more rowsTo afford a median-priced home of $402,343, Americans need an annual income of $110,871, up 46 percent since the start of 2020. Americans must earn at least $100,000 annually to afford a median-priced home in 22 states and the District of Columbia.
What income do you need to afford a house in the US? ›
Now, Americans must earn roughly $106,500 in order to comfortably afford a typical home, a significant increase from the $59,000 annual household income that put homeownership within reach for families in 2020, according to new research from digital real estate company Zillow.
Can I afford a 700k house with 100K salary? ›
Most likely yes. Assuming a 20 percent down payment on a 30-year fixed-rate mortgage with a 6.5 percent interest rate, you'll pay about $4,200 per month in housing costs on a $700,000 home purchase. According to the 28/36 rule, you should spend a maximum of 28 percent of your income on housing.
Can a family of four live on 100K a year? ›
Based on this outline, Hawaii is by far the most expensive state for a family of four, but there are 12 states where a household would need to earn over $100,000 to get by: Hawaii: $182,900. Massachusetts: $142,341. California: $130,239.
What income is upper middle class? ›
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range.
What percent of Americans live paycheck to paycheck? ›
Recent MarketWatch Guides survey results indicate that 66.2% of Americans feel like they're living paycheck to paycheck. Respondents struggling to make ends meet span demographics, including genders, generations and incomes.
What is the top 1 income in the US? ›
The data from the Economic Policy Institute (EPI) shows that annual wages for the top 1% in 2021 in the U.S. reached $819,324 on average. Those considered to be in the top 0.1% earned an average of $3,312,693 annually. Meanwhile, those in the bottom 90% earned an average income of $36,571 annually, EPI data showed.
The Bottom Line. On a $75,000 salary, you could potentially afford a house worth between $250,000 to $300,000, depending on your specific financial situation. This range assumes you have a good credit score and manageable existing debts.
Can you afford a house making $50,000 a year? ›
On a $50,000 salary, you could potentially afford a house worth between $160,000 to $190,000, depending on your specific financial situation and local market conditions. While this may limit your options in some high-cost areas, there are still many markets where homeownership is achievable at this income level.
How much house can I afford and live comfortably? ›
How much house can I afford based on my salary? To calculate how much house you can afford based on your salary, use the 25% rule—never spend more than 25% of your monthly take-home pay (after tax) on monthly mortgage payments.
What is the lowest income to qualify for a house? ›
There's no universal minimum income required for mortgage loans. Your approval depends on the mortgage amount, your debt-to-income ratio, credit score, and other factors. However, you need to prove that you have a stable income that's sufficient to cover the mortgage payments, property taxes, and homeowner's insurance.
How much house can I afford if I make $100000 a year? ›
Potential home price: Around $300,000
With this combination, you could potentially afford a home priced around $300,000. Let's see what your monthly obligations might look like: Monthly payment: ~$2,300 (including estimated taxes and insurance)
Can I afford a house making $70,000 a year? ›
If you make $70K a year, you can likely afford a new home between $290,000 and $310,000*. That translates to a monthly house payment between $2,000 and $2,500, which includes your monthly mortgage payment, taxes, and home insurance.
Can I buy a million dollar home with 100k salary? ›
And, here is the answer to the question: You need anywhere from $100,000 to $300,000 in income to buy a $1 million dollar home right now. The reason there is so much variance is because there are so many factors that impact qualification, including: Size of down payment. Property tax rates.
How much house can I afford if I make 120000 a year? ›
With a $120,000 annual salary, you could potentially afford a house priced between $450,000 and $500,000, depending on your financial situation, credit score, and current market conditions. However, this is a broad range; your specific circ*mstances will determine where you fall.
How much house can I afford on a 110k salary? ›
If you earn $110,000 in gross income, that's approximately $9,166 each month. Applying the rule, this means your monthly housing payment should not exceed $2,566, which is 28 percent of your gross monthly income.
How much house can I afford if I make $90000 a year? ›
On a $90,000 salary, you could potentially afford a house worth between $280,000 to $320,000, depending on your specific financial situation. This range assumes you have a good credit score and manageable existing debts.
