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Home affordability has become a critical issue for many Americans as high home prices paired with high mortgage rates has made it increasingly difficult to own a home.
With the soaring cost of home prices outpacing wage growth a household must earn just under six figures to afford the median home price.
Table of contents
- Home affordability across the USA
- States where homes are affordable
- States where homes are affordable
Home affordability across the USA
The percentage of income that a household allocates towards monthly mortgage payments can provide a good indication into how affordable home prices are — with the traditional advice to spend no more than 28% of gross monthly income on home expenses.
Only eleven states in the USA are considered affordable — that is where the monthly mortgage payment is 28% or less of the monthly median household income in that state.
States where homes are considered affordable
These are the eleven states where you would be able to afford a mortgage payment on the median household income following the 28/36 rules of affordability:
| State | Household Income (HHI) | Mortgage Payment (MP) | HHI / MP |
|---|---|---|---|
| Iowa | $71,433 | $1,371 | 23.03% |
| Illinois | $80,306 | $1,696 | 25.34% |
| North Dakota | $76,525 | $1,628 | 25.53% |
| Ohio | $67,769 | $1,464 | 25.93% |
| Indiana | $69,477 | $1,514 | 26.14% |
| Michigan | $69,183 | $1,536 | 26.64% |
| Missouri | $68,545 | $1,525 | 26.70% |
| Nebraska | $74,590 | $1,673 | 26.92% |
| Kansas | $70,333 | $1,584 | 27.02% |
| Oklahoma | $62,138 | $1,430 | 27.62% |
| Pennsylvania | $73,824 | $1,753 | 28.49% |
The mortgage payment was calculated based on the median home price per state with a twenty percent down payment applied. A 30-year amortization period and fixed mortgage rate of 6.08% was used to calculate the mortgage payment. Homeowners insurance was estimated to be $66/month and property tax 0.07% the value of the home.
Source: NAHB; NAR