Can you actually afford a home on your income?
Enter your income and housing costs to see what percentage of your income goes on housing and where that sits relative to the population in your region.
Querying population data…
When do most people buy?
Age of first-time home purchase by country.
What percentage of income should go to housing?
The traditional guideline is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs (mortgage, property tax, insurance) and no more than 36% on total debt payments including housing. Financial planners now commonly use 30% as the general upper limit. By this measure, the US housing affordability crisis is stark: in 2024, a median-income household earning $80,000 per year can afford a home priced at around $240,000 using the 28% rule, while the national median home price is $420,000. The price-to-income ratio of 5.25 is more than double the 2.5-3.0 ratio historically considered healthy. (Source: NAR; Harvard JCHS)
How much has housing affordability changed?
In 2000, the median US home cost 2.9 times the median annual household income. By 2024, that ratio had risen to 5.25x. The 2020-2022 pandemic period saw an especially rapid deterioration: median home prices increased 40% in 24 months while mortgage rates tripled from 3% to 7% by late 2022. For a buyer purchasing at the 2024 median price with a 20% down payment and a 7% fixed rate, the monthly payment is approximately $2,240, more than double the equivalent payment for the same home bought at 2020 rates. (Source: Freddie Mac; NAR)
Frequently asked questions
The 28/36 rule is a lending guideline stating that a household should spend no more than 28% of its gross monthly income on housing costs (mortgage principal, interest, property taxes, and home insurance combined) and no more than 36% on total debt payments (housing plus car loans, student loans, credit cards). Lenders use the 36% figure as a debt-to-income ratio (DTI) threshold for conventional loan qualification, though FHA loans allow up to 43% DTI and some lenders will stretch to 45-50% in strong financial profiles. If your housing costs exceed 30% of gross income, you are "cost-burdened" per the US Department of Housing and Urban Development definition.
On a $100,000 annual salary, the 28% rule allows $2,333 per month for housing costs. At 2024 rates (approximately 7% for a 30-year fixed mortgage), $2,333/month covers a loan of approximately $294,000. Add a 10% down payment of $32,700 and your maximum home price is around $327,000. If you can put 20% down, the same payment covers a home around $340,000. With zero existing debt, a lender may allow you to stretch to $350,000-$375,000 under the 36% DTI rule. These figures vary by state due to property tax and insurance cost differences. In high-cost markets like California or New York, $327,000 is substantially below the median, while in many Midwest markets it buys a solid home.
No. The 20% figure is widely cited but not required for most loan programmes. Conventional loans allow 3-5% down with private mortgage insurance (PMI) until you reach 20% equity. FHA loans require 3.5% down with a credit score of 580 or higher. VA loans (for eligible veterans and service members) require 0% down. USDA loans cover eligible rural and suburban properties with 0% down. First-time buyer programmes vary by state and can offer down payment assistance of $5,000-$25,000 as grants or forgivable loans. The trade-off: putting less than 20% down means paying PMI (typically 0.5-1.5% of the loan annually) until you reach 20% equity. The median down payment for first-time buyers in 2024 was 8%, per NAR.
The least affordable states by price-to-income ratio in 2024 are Hawaii, California, Massachusetts, New York, and Colorado, where median home prices exceed 8-12x median household income. The most affordable states by the same measure are Mississippi, West Virginia, Ohio, Indiana, and Iowa, where median prices are 3-4x median income. Affordability has deteriorated across all states since 2020, but the gap between the most and least affordable markets has widened. Sun Belt states including Florida, Arizona, and Texas saw the sharpest price increases during 2020-2022 and moved significantly less affordable in a short period. (Source: NAR; Census Bureau ACS)
Conventional mortgage guidance uses a price-to-income ratio of 3x to 4x gross annual household income as the affordable range. At 3x income you can generally qualify for a conventional mortgage with a 20% down payment and keep monthly payments within the recommended 28% of gross monthly income. A ratio above 5x is widely considered stretched, requiring either a very low rate environment, a large down payment, or dual high incomes to make repayments manageable. By 2024, the US national median ratio stood at approximately 5.4x, above the traditional ceiling, which is why first-time buyer rates have fallen to historic lows. (Source: Harvard Joint Center for Housing Studies 2024)
As of mid-2024 the median US home price was approximately $412,000. To purchase this home at the 28% front-end ratio guideline with a 20% down payment and a 7% 30-year mortgage rate, a buyer would need a gross household income of roughly $105,000 to $110,000. That is above the US median household income of approximately $80,610, which means the median home is out of reach for the median household at current rates and prices. NAR data shows the qualifying income threshold nearly doubled between 2020 and 2024 as both prices and rates surged simultaneously. (Source: NAR; US Census Bureau; Freddie Mac PMMS)
The median age of a first-time home buyer in the US reached 38 in 2024, a record high and up from 29 in the 1980s. The primary driver is the combination of student debt, rising rents that slow savings accumulation, and house prices that have grown faster than wages for two consecutive decades. Tighter lending standards after 2008 also raised the effective income and credit threshold for mortgage approval. Additionally, a longer period of urban rental living, delayed marriage and family formation, and the concentration of entry-level jobs in expensive metro areas all push the purchase decision later in life. (Source: NAR Profile of Home Buyers and Sellers 2024)
At the 2024 median household income of approximately $80,610 and median home price of $412,000, a 20% down payment is $82,400. Saving that amount is essentially a full year of gross income. If a household saves 10% of net income (roughly $6,000-$7,000 per year after tax), it would take over 12 years to accumulate the down payment without investment returns. This is why many first-time buyers use lower down payment options such as FHA loans (3.5% minimum), Fannie Mae HomeReady (3%), or VA loans (0% for eligible veterans), accepting the cost of private mortgage insurance in exchange for a faster path to ownership. (Source: NAR; Federal Reserve SCF 2022)
- National Association of Realtors (NAR). Existing Home Sales and Price Data. 2024.
- Harvard Joint Center for Housing Studies. The State of the Nation's Housing. 2024.
- Federal Reserve. Survey of Consumer Finances. 2022.
- US Census Bureau. American Community Survey (ACS). 2023.
- Freddie Mac. Primary Mortgage Market Survey. 2024.