The typical home price across the United States was $362,482 in June — a 3.2% year-over-year increase according to Zillow.

How much house can I afford? Find our what is needed to afford a home in the United States.

By Patrick Ross
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Reviewed By Jacob Norris
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Last Updated July 19, 2024

Max Home Price

GDS / TDS 35.00% / 42.00%

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 that you receive also has a large impact on the size of mortgage you can afford.

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 type of loans 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 mortgage default insurnace.

Loan Type | Minimum Down Payment Required |
---|---|

Conventional Loan | 3% |

FHA Loans | 3.5% |

VA Loans | 0% |

USDA Loans | 0% |

When determining mortgage affordability, lenders use the 26/36 rule to see how affordable mortgage payments are on a typical home. This ratio outlines that your home related costs should be no more than 28% of your gross income. It also states that you should not spend more than 36% of your gross monthly income on total debts, which would include your mortgage as well as any other loans.

The median sales price of homes sold in the United States have 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 impacts the affordability of homes greatly. To see the full impact of how home affordability has changed, we should also take into consideration the 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? At the 2019 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 comfortable.

At a 2024 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 would now take around $95,000 in income to afford a home. To afford a home sold at the median selling price in 2024 it would take 72% more income to be able to comfortable afford the home.

Home 2019 | Home 2024 | |
---|---|---|

Median Home Price | $313,000 | $420,000 |

5% Down Payment | $15,650 | $21,040 |

Mortgage Rate | 3.94% | 7.00% |

Income Required | $55,000 | $95,000 |

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 on the median sales price. 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 used 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 be able to afford this median home price. The median household income in 2022 was $6,215 which would be $6,658 in 2024 when adjusted for inflation. The median household income would have to increase 58% in order for the median home price in the United States to be considered affordable based on median household income.

source: FRED, Redfin, Zillow