How Much You Need to Make to Comfortably Afford a Home

March 25, 2024 - 3 min read

The cost of home buying

Housing prices may be your biggest obstacle to homeownership.

While house hunters have faced tough conditions, not every market is created equal. Even among the 50 largest metro areas, property values can vary drastically.

See where you need the most and least income to comfortably afford homeownership across the U.S.

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Rising housing costs outpace wage increases

The world has seen a whirlwind of change since the start of the Covid pandemic.

In real estate, the last few years came with a huge range of mortgage rates, fewer for-sale options, and historically high home price growth.

These factors, combined with being gouged by high inflation and excessive corporate profiteering, made buying a home especially difficult for the average house hunter.

In January 2024, the typical borrower paid $2,188 a month for their mortgage, according to Zillow. That surged 96.4% from January 2020. Home prices grew 42.4% over that same timeframe, while the median income rose 23%. Further, the 30-year fixed rate mortgage (FRM) averaged 6.64% in January 2024 versus around 3.5% in January 2020.

All in all, the report showed that home buyers needed to earn $47,500 more annually in 2024 ($106,500) compared to 2020 ($59,000) to comfortably afford a typically priced home — $344,159 in January 2024 and $244,525 in January 2020, according to the Zillow Home Value Index (ZHVI). The ZHVI is the seasonally adjusted, typical value for homes in the 35th-to-65th percentile range.

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“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates and rent growth far outpaced wage gains,” said Zillow Senior Economist Orphe Divounguy. “Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros. Mortgage rates easing down has helped some, but the key to improving affordability long term is to build more homes.”

How much home buyers need to make, by city

Between states, cities and even neighborhoods, costs of living can vary — and sometimes widely — from place to place. This is why location is so often the keystone in real estate.

As of January 2024, borrowers would’ve needed to make $106,536 to comfortably afford the mortgage of a typically priced U.S. home ($342,941), according to the Zillow. Zillow defines “comfortably afford” as spending no more than 30% of income on monthly mortgage payments and putting 10% down.

Generally, coastal locations tend to be more expensive than their inland counterparts.

Check what interest rates you qualify for here

Perhaps unsurprisingly, the four places needing the highest income (and six of the top 10) are in California. The biggest incomes to afford a typical home came at $454,296 in San Jose, $339,864 in San Francisco, and $279,250 in Los Angeles.

At the more reasonably priced end of the spectrum, you need to make $58,232 to purchase a property in Pittsburgh. That’s followed by $69,976 in Memphis, Tenn., and $70,810 in Cleveland.

The table below shows the 50 largest U.S. housing markets in order from lowest to highest income needed to afford a home, according to Zillow. It also shows the ZHVI for each metro area.

Income Needed to Afford a Mortgage, January 2024ZHVI, January 2024Metropolitan
Income Needed to Afford a Mortgage, January 2024ZHVI, January 2024
Memphis, Tenn.$69,976$230,807Atlanta$115,430$370,548
Cleveland$70,810$211,712Tampa, Fla.$116,329$370,474
New Orleans$74,048$232,870Las Vegas$119,529$407,516
Birmingham, Ala.$74,338$246,805Dallas$121,398$366,690
Oklahoma City$74,732$226,048Orlando, Fla.$121,418$386,687
Detroit$75,662$236,025Nashville, Tenn.$128,535$425,827
Buffalo, N.Y.$76,884$242,435Raleigh, N.C.$130,472$430,562
St. Louis, Mo.$76,895$238,231Phoenix$131,322$447,074
Louisville, Ky.$77,450$243,810Providence, R.I.$142,928$449,025
Indianapolis$82,037$267,301Austin, Texas$149,267$451,322
Kansas City, Mo.$92,896$289,290Salt Lake City$154,455$523,832
Houston$95,374$300,955Portland, Ore.$161,624$528,724
San Antonio$95,767$283,161Washington, D.C.$166,551$539,116
Columbus, Ohio$95,821$297,637Sacramento, Calif.$172,261$559,243
Virginia Beach, Va.$102,703$332,820Riverside, Calif.$173,375$563,468
Richmond, Va.$106,170$349,558New York$213,615$627,944
Jacksonville, Fla.$109,271$348,665San Diego$273,613$902,199
Charlotte, N.C.$111,051$368,712Los Angeles$279,250$918,247
Hartford, Conn.$114,109$334,712San Francisco$339,864$1,104,853
Minneapolis$114,344$355,511San Jose, Calif.$454,296$1,493,255
United States$106,536$342,941
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The bottom line for home buyers

While conditions are less than ideal, buying a home can still be attainable and a good idea in 2024.

Affordability is a major obstacle, but housing inventory has started showing signs of improvement and many expect interest rates to decrease moving forward. Those who do need financial help should see if they qualify for down payment assistance grants and programs. And be prepared to move fast if you find the right property.

If you’re ready to become a homeowner, reach out to a local mortgage lender today.

Time to make a move? Let us find the right mortgage for you

Paul Centopani
Authored By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.
Aleksandra Kadzielawski
Reviewed By: Aleksandra Kadzielawski
The Mortgage Reports Editor
Aleksandra is the Senior Editor at The Mortgage Reports, where she brings 10 years of experience in mortgage and real estate to help consumers discover the right path to homeownership. Aleksandra received a bachelor’s degree from DePaul University. She is also a licensed real estate agent and a member of the National Association of Realtors (NAR).