In 26 of 50 states, the median household income is not enough to comfortably afford the median-priced home. Nationally, buying the median home in 2026 requires roughly $95,300 in gross annual income — about $15,300 more than the US median household income of $80,000. In Hawaii and California, that gap exceeds $83,000. In Iowa and Kansas, median earners are actually in comfortable territory.
This article shows the income required to afford the median home in all 50 states, the actual median household income, and the affordability gap — ranked from most to least affordable.
How We Calculated the Numbers
Assumptions used throughout:
| Variable | Value |
|---|---|
| Mortgage rate | 6.95% (30-year fixed, Freddie Mac PMMS, week of Sept. 17, 2026) |
| Down payment | 20% of purchase price |
| DTI guideline | 28% front-end (principal & interest only) |
| Payment type | Principal & interest (P&I) — excludes property tax, insurance |
The formula:
Monthly P&I = Loan amount × 0.006619
Annual income needed = (Monthly P&I ÷ 0.28) × 12
At 6.95% with 20% down, income needed equals approximately 22.7% of the home’s purchase price. A $400,000 home requires roughly $90,700 in gross annual income; a $600,000 home requires $136,100.
Data sources: Median home prices are derived from NAR and Zillow state-level data for early 2026. Median household incomes reflect US Census Bureau estimates updated for 2026.
All 50 States: Income Needed vs. Median Household Income
States are ranked by affordability gap — largest gap (most unaffordable) first.
| State | Median Home Price | Income Needed | Median HH Income | Gap |
|---|---|---|---|---|
| Hawaii | $820,000 | $186,100 | $93,000 | +$93,100 |
| California | $760,000 | $172,500 | $89,000 | +$83,500 |
| Massachusetts | $580,000 | $131,600 | $96,000 | +$35,600 |
| Colorado | $540,000 | $122,600 | $87,000 | +$35,600 |
| New York | $495,000 | $112,300 | $78,000 | +$34,300 |
| Washington | $530,000 | $120,300 | $89,000 | +$31,300 |
| Oregon | $465,000 | $105,500 | $75,000 | +$30,500 |
| Idaho | $430,000 | $97,600 | $68,000 | +$29,600 |
| Nevada | $430,000 | $97,600 | $70,000 | +$27,600 |
| Florida | $415,000 | $94,200 | $67,000 | +$27,200 |
| Utah | $480,000 | $108,900 | $84,000 | +$24,900 |
| Montana | $405,000 | $91,900 | $67,000 | +$24,900 |
| Rhode Island | $450,000 | $102,100 | $79,000 | +$23,100 |
| Maine | $365,000 | $82,800 | $68,000 | +$14,800 |
| Arizona | $385,000 | $87,400 | $73,000 | +$14,400 |
| New Jersey | $490,000 | $111,200 | $97,000 | +$14,200 |
| Vermont | $390,000 | $88,500 | $76,000 | +$12,500 |
| Tennessee | $350,000 | $79,400 | $67,000 | +$12,400 |
| North Carolina | $340,000 | $77,200 | $68,000 | +$9,200 |
| New Mexico | $290,000 | $65,800 | $58,000 | +$7,800 |
| New Hampshire | $435,000 | $98,700 | $92,000 | +$6,700 |
| Texas | $345,000 | $78,300 | $72,000 | +$6,300 |
| Wyoming | $345,000 | $78,300 | $72,000 | +$6,300 |
| Georgia | $335,000 | $76,000 | $71,000 | +$5,000 |
| Delaware | $360,000 | $81,700 | $77,000 | +$4,700 |
| South Carolina | $300,000 | $68,100 | $64,000 | +$4,100 |
| Virginia | $380,000 | $86,200 | $87,000 | -$800 |
| Connecticut | $395,000 | $89,600 | $91,000 | -$1,400 |
| Minnesota | $360,000 | $81,700 | $84,000 | -$2,300 |
| South Dakota | $295,000 | $67,000 | $70,000 | -$3,000 |
| Alaska | $355,000 | $80,600 | $85,000 | -$4,400 |
| Mississippi | $200,000 | $45,400 | $52,000 | -$6,600 |
| Kentucky | $235,000 | $53,300 | $61,000 | -$7,700 |
| Alabama | $225,000 | $51,100 | $59,000 | -$7,900 |
| Illinois | $300,000 | $68,100 | $76,000 | -$7,900 |
| Louisiana | $220,000 | $49,900 | $58,000 | -$8,100 |
| Pennsylvania | $290,000 | $65,800 | $74,000 | -$8,200 |
| Arkansas | $210,000 | $47,700 | $56,000 | -$8,300 |
| Wisconsin | $280,000 | $63,500 | $73,000 | -$9,500 |
| Oklahoma | $220,000 | $49,900 | $61,000 | -$11,100 |
| Michigan | $245,000 | $55,600 | $67,000 | -$11,400 |
| Indiana | $245,000 | $55,600 | $67,000 | -$11,400 |
| Maryland | $395,000 | $89,600 | $102,000 | -$12,400 |
| Ohio | $235,000 | $53,300 | $66,000 | -$12,700 |
| Missouri | $235,000 | $53,300 | $66,000 | -$12,700 |
| Nebraska | $255,000 | $57,900 | $73,000 | -$15,100 |
| West Virginia | $175,000 | $39,700 | $55,000 | -$15,300 |
| Kansas | $230,000 | $52,200 | $68,000 | -$15,800 |
| North Dakota | $260,000 | $59,000 | $75,000 | -$16,000 |
| Iowa | $225,000 | $51,100 | $70,000 | -$18,900 |
Key: Positive gap = income shortfall (cannot afford median home on median income). Negative gap = income surplus.
The States Where the Gap Is Worst
Hawaii: $93,100 gap
Hawaii’s median home price of $820,000 is nearly double the national median. Even with 20% down ($164,000) and a $656,000 loan, the monthly principal and interest payment runs approximately $4,342. That requires $186,100 in gross annual income — exceeding double Hawaii’s median household income of $93,000. Hawaii’s high incomes soften the blow somewhat, but housing costs still far outpace earnings.
California: $83,500 gap
A $760,000 median price translates to a $608,000 loan and a $4,025 monthly payment. Required income: $172,500. California’s median household income of $89,000 — already among the nation’s highest — covers only about half the required income. This explains why California’s homeownership rate sits well below the national average.
Massachusetts, Colorado, New York, Washington: $31,000–$36,000 gaps
These four states cluster tightly, all requiring $112,000–$132,000 in income to afford the median home while median households earn $78,000–$96,000. Colorado’s surge from remote-work migration drove median prices to $540,000. Massachusetts combines a high price of $580,000 with a somewhat higher median income of $96,000, resulting in the same approximate gap as Colorado.
Worked Example: The National Median
Home price: $420,000
Down payment (20%): $84,000
Loan amount: $336,000
Interest rate: 6.95%, 30-year fixed (Freddie Mac PMMS, week of Sept. 17, 2026)
Monthly P&I: $336,000 × 0.006619 = $2,224
Income needed (28% DTI): ($2,224 ÷ 0.28) × 12 = $95,300
US median household income: ~$80,000
Affordability gap: +$15,300
The typical American household falls $15,300 short of the income needed to buy the median-priced US home — before accounting for property taxes, insurance, or HOA fees.
What If You Can Only Put 5% Down?
Most first-time buyers cannot afford 20% down on a $420,000 home ($84,000). With only 5% down, the math gets substantially harder:
| Down Payment | Loan Amount | Monthly P&I | Income Needed |
|---|---|---|---|
| 20% ($84,000) | $336,000 | $2,224 | $95,300 |
| 10% ($42,000) | $378,000 | $2,502 | $107,200 |
| 5% ($21,000) | $399,000 | $2,641 | $113,200 |
A first-time buyer with 5% down on the median US home needs roughly $113,200 in gross income — $33,200 more than the median household earns. This is before PMI (private mortgage insurance), which is typically required when putting less than 20% down and adds $100–$250 per month to the housing cost.
See our down payment guide for strategies to reach a larger down payment faster.
The States Where Median Income Still Covers It
Twenty-four states have negative gaps — meaning the median household earns enough to qualify for the median-priced home using conventional guidelines.
Most affordable states (largest income surplus):
- Iowa (-$18,900): A $225,000 median price requires only $51,100 in income. With median household income of $70,000, Iowa households have $18,900 in annual headroom.
- North Dakota (-$16,000): $260,000 median price, $59,000 required, $75,000 median income.
- Kansas (-$15,800): $230,000 median home, $52,200 income needed, $68,000 median earnings.
- West Virginia (-$15,300): The lowest median home price in the nation at $175,000 means income needed is only $39,700 — well within reach even for below-median earners.
- Nebraska, Indiana, Michigan (-$12,500 to -$16,300): Stable Midwest markets where home prices have risen moderately and incomes have kept pace.
Important caveat: A negative gap does not mean housing is “easy” in these states. Many of these states have lower median incomes ($52,000–$70,000), and a $50,000 annual income qualifying for a $225,000 mortgage still requires careful budgeting. The gap metric reflects whether the median household can qualify under standard guidelines — not whether it is financially stress-free.
Why the Affordability Gap Widened So Dramatically
Between 2020 and 2026, the national median home price increased roughly 45–50%, driven by pandemic-era demand, remote-work migration, and historically low inventory. Mortgage rates then surged from under 3% in 2021 to 6.5–7% in 2023–2026, effectively doubling monthly payments on the same-priced home.
The combined effect: a buyer who could afford a $350,000 home at 3% in 2021 can now afford roughly $223,000 on the same income at 6.95% (the current 30-year fixed average as of September 2026). Median home prices, however, did not fall to match — they plateaued or continued rising in most markets.
This “lock-in effect” — where existing homeowners with sub-3% mortgages refuse to sell and surrender their rate — has kept inventory tight and prices elevated, widening the gap for everyone trying to enter the market.
For a deeper look at how rate changes affect your monthly payment, see The True Cost of a Mortgage Rate Difference.
How to Close Your Personal Affordability Gap
If you live in a state with a large affordability gap, several strategies can reduce the income required:
- Buy below the median. The median is a midpoint — roughly half of homes in most markets sell below it. Targeting starter homes or condos at 70–80% of the median price cuts required income by 20–30%.
- Increase your down payment. Every extra dollar toward the down payment reduces the loan and the monthly payment. Even moving from 5% to 10% down saves $139/month on a $420,000 home.
- Explore down payment assistance programs. Most states offer grants or forgivable loans for first-time buyers. See help with mortgage payments for state-specific programs.
- Consider lower-cost markets. Remote-work flexibility has made it feasible for many workers to earn higher wages while buying in lower-cost states.
- Wait for rate movement. At 5.5% instead of 6.95%, the income needed on a $420,000 home drops from $95,300 to roughly $81,800 — nearly closing the national gap.
The American Dream Affordability report tracks how affordability has shifted over time and which metros remain within reach.
Frequently Asked Questions
What income do I need to buy a $300,000 home?
At 6.95% with 20% down, a $300,000 home requires approximately $68,100 in gross annual income (monthly P&I of $1,589, divided by 0.28, multiplied by 12). With 5% down, the required income rises to about $80,900.
Does the 28% DTI rule still apply in 2026?
The 28% front-end DTI is the standard conventional mortgage guideline used by Fannie Mae and Freddie Mac. Lenders may approve borrowers up to 43–50% total DTI (all debts combined), but keeping housing costs below 28% of gross income is the widely accepted benchmark for financial comfort.
Are these income figures before or after tax?
All figures in this article are gross (pre-tax) income. Lenders qualify borrowers on gross income. Your take-home pay will be lower depending on your tax bracket, state income tax, and payroll deductions.
How does this compare to renting?
In most high-gap states, renting remains significantly cheaper on a monthly cash-flow basis, though renters build no equity. The homeownership rate by state data shows that states with large affordability gaps tend to have lower homeownership rates, consistent with cost-driven renting.
Income figures are estimates based on 2026 median home price and household income data from NAR, Zillow, and the US Census Bureau. Mortgage payment calculations assume a 30-year fixed rate of 6.95% (Freddie Mac PMMS, week of September 17, 2026) and 20% down payment. Actual qualification depends on credit score, total debt load, lender guidelines, property taxes, and insurance. This is not financial advice.
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