How much house can I afford? It’s the question every prospective homebuyer asks — and the answer depends on more than just your salary. Your debt-to-income ratio, credit score, down payment savings, and local property taxes all play critical roles in determining what mortgage lenders will approve and what you can comfortably pay each month.
The median home price in the US for August 2024 is $416,700 — a 3.1% increase from August 2023. Meanwhile, the average mortgage payment has climbed to nearly $1,900 per month, squeezing affordability for millions of Americans. The mortgage affordability gap between what the median household earns and what’s needed to afford the median home has widened to over $34,000 annually.
The primary factors impacting mortgage affordability in the United States are your household income, current debt obligations, and the size of your down payment. The mortgage interest rate you receive also has a significant impact — a 1% difference in your rate can change your buying power by $30,000-$50,000. See our mortgage payment calculator for a detailed monthly payment breakdown or check the income needed to afford a home calculator to find the minimum salary required.
How Much Down Payment Is Needed to Purchase a Home in the United States?
A down payment is typically mandatory when applying for most mortgage loans. If you are purchasing a home with a conventional loan, the standard minimum down payment is 3%. For those purchasing a home with FHA loans, as little as 3.5% can be used as the down payment. Some loan types such as VA and USDA loans have no minimum down payment requirements. If you are only providing the minimum down payment, you will likely have to purchase private mortgage insurance (PMI), which adds 0.5%-1% of the loan amount to your annual housing costs.
| Loan Type | Minimum Down Payment Required | Best For |
|---|---|---|
| Conventional | 3% | Buyers with good credit (700+) |
| FHA | 3.5% (credit score 580+); 10% (credit score 500-579) | First-time buyers, lower credit scores |
| VA | 0% | Veterans and active military |
| USDA | 0% | Rural area homebuyers |
| Jumbo | 5-10% | High-priced homes above conforming limits |
| Second homes/investment | 10-25% | Non-primary residences |
The average down payment in the US is around 13% for all buyers and 6% for first-time homebuyers. While putting down less upfront preserves cash, it increases your monthly payment and total interest paid over the life of the loan.
The 28/36 Rule: How Lenders Determine What You Can Afford
When determining mortgage affordability, lenders use the 28/36 rule to assess how affordable mortgage payments are on a typical home:
- 28% Front-End Ratio: Your total housing costs (mortgage payment, property taxes, insurance, HOA fees) should not exceed 28% of your gross monthly income
- 36% Back-End Ratio: Your total monthly debt payments (housing plus student loans, car payments, credit card minimums, etc.) should not exceed 36% of your gross monthly income
For example, if your household earns the median income of $85,255 per year ($7,105/month), the 28/36 rule suggests:
- Maximum housing payment: $1,989/month (28% of gross income)
- Maximum total debt: $2,558/month (36% of gross income)
Some lenders — particularly for FHA and VA loans — allow higher debt-to-income ratios (up to 43% or even 50% in some cases), but stretching beyond 36% increases your risk of becoming “house poor.”
Income Needed to Afford US Home Prices
The median sales price of homes sold in the United States has increased from $313,000 in 2019 to $420,800 in 2024. This is an increase of 34.44% — or $107,800 — over a 5-year period, which dramatically impacts home affordability. To see the full impact of how home affordability has changed, we also need to consider mortgage rates at these specific times. The average 30-year fixed mortgage rate in 2019 was 3.94%; fast forward to 2024 and the average 30-year fixed rate mortgage is 6.99%.
How much income would it take to afford these homes?
2019 Scenario: At the median sale price of $313,000, a 5% down payment would be $15,650. At the average mortgage rate of 3.94% over a 30-year amortization period, it would take an income around $55,000 to afford comfortably.
2024 Scenario: At a median home sale price of $420,800, a 5% down payment would be $21,040. With mortgage rates sitting at 7% over a 30-year amortization period, it now takes around $95,000 in income to afford a home — a 72% increase in required income over just 5 years.
| Metric | 2019 | 2024 | Change |
|---|---|---|---|
| Median Home Price | $313,000 | $420,000 | +34% |
| 5% Down Payment | $15,650 | $21,040 | +34% |
| Mortgage Rates | 3.94% | 7.00% | +78% |
| Income Required | $55,000 | $95,000 | +72% |
| Median Household Income | ~$63,000 | ~$85,255 | +35% |
The gap between required income ($95,000) and median household income ($85,255) represents the housing affordability crisis affecting millions of Americans. For more on this trend, see our home cost to income ratio analysis showing how home prices have compared to household income since 1971.
How Much House Can I Afford by Salary?
Here’s a quick reference showing approximate home prices you can afford at different salary levels, assuming a 10% down payment, 7% mortgage rate, and the 28% rule:
| Annual Salary | Monthly Housing Budget (28%) | Approximate Home Price |
|---|---|---|
| $50,000 | $1,167 | $175,000-$190,000 |
| $75,000 | $1,750 | $260,000-$285,000 |
| $100,000 | $2,333 | $350,000-$380,000 |
| $125,000 | $2,917 | $435,000-$475,000 |
| $150,000 | $3,500 | $525,000-$570,000 |
| $200,000 | $4,667 | $700,000-$760,000 |
These estimates vary significantly based on your local property taxes (which can range from 0.3% in Hawaii to 2.2% in New Jersey), home insurance costs, and existing debt obligations. Use the calculator above for a personalized estimate.
For detailed breakdowns at specific income levels, see:
Factors That Increase Your Mortgage Affordability
If the calculator shows you can’t afford the home you want, here are strategies to increase your buying power:
Improve Your Credit Score: Borrowers with scores above 760 get the best rates — often 0.5% to 1% lower than those with scores around 650. On a $400,000 mortgage, that difference saves $100-$200/month. See the average credit score and how yours compares.
Reduce Existing Debt: Paying off credit card balances or car loans improves your debt-to-income ratio, allowing lenders to approve a larger mortgage.
Increase Your Down Payment: Every additional 5% down reduces your monthly payment and may eliminate PMI earlier. The average down payment of 13% represents a reasonable target.
Consider Different Locations: The same income affords vastly different homes in different markets. Home prices vary dramatically by city — what buys a condo in San Francisco might buy a 4-bedroom house in Phoenix.
Look at 15-Year Mortgages: While monthly payments are higher, rates are typically 0.5-0.75% lower, and you’ll pay far less interest over the life of the loan.
Monthly Income Needed to Afford a Home Across the United States
This map shows how much gross monthly income you would need to afford a house in each state. Home prices are based on the April 2024 Redfin median sales price in each state. The mortgage amount is the median home price less a 5% down payment. A mortgage rate of 7.08% was used, which is the current average 30-year fixed rate in the United States. For a home to be considered affordable, the calculation uses the 28% rule.
The median home price across the United States in April 2024 was $432,812. It would take a monthly gross income of $10,528 based on the 28% rule to afford this median home price. The median household income in 2022 was $6,215/month, which would be $6,658 in 2024 when adjusted for inflation. The median household income would have to increase 58% for the median home price in the United States to be considered affordable.
This affordability gap explains why homeownership rates among younger Americans have declined and why many buyers are turning to more affordable markets or reconsidering renting vs buying.
Source: FRED, Redfin, Zillow