Buying a home in today’s market comes with various challenges, including figuring out where you want to live and where you can afford to live. Considering rising costs of living across the country, low inventory and high interest rates, many people may feel like owning a home is getting more out of reach.

Running the numbers makes this feeling a bit more concrete. In today’s economy, owning a home may require more cash than you would expect. Read on to find out exactly how much you need to earn each year to put homeownership within comfortable reach.

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How much money do you need to earn in order to buy a home?

According to the Realtor.com April 2025 Inventory Report, a household needs to earn about $114,000 annually in order to comfortably purchase a home. This number is based on the national median list price of a home, which is $431,250, and assumes a 30-year fixed mortgage, a 20% down payment and homebuyers following what’s known as the “30% rule.” (This guideline for buying a home recommends that households spend no more than 30% of their gross income on their housing costs.)

If the recommended income to buy a home seems high to you, you’re not wrong. In 2019, the national household income required to buy a median-priced home was only $67,000, meaning that it has increased nearly $47,000 or 70% in just six years.

An annual suggested income of $114,000 means that households should earn about $9,500 a month before taxes in order to comfortably afford the three biggest homeowner costs: mortgage, property taxes and insurance on a typical home.

What is the median American salary?

According to data published in 2023 from the U.S. Census Bureau, which is the latest available, the typical household earned just over $80,600 per year. This is roughly 41% less than the recommended income to purchase a home if people follow the aforementioned 30% rule.

That’s why some experts suggest thinking of the 30% rule as a useful benchmark, not a strict rule. “Staying under 30% gives room to save, invest and spend elsewhere, but doesn’t always apply in our ever-changing market climate,” says Natasha Witka Amanna, a broker with Century 21 New West Properties. “The reality is many buyers now spend 35% to 43% of their gross income on housing.”

Why is it so much more expensive to buy a home today than it was six years ago?

According to Amanna, two factors have led to higher housing prices: more demand than supply, and increased interest rates. In 2019, the average interest rate on a 30-year fixed mortgage was 3.94%, while in 2024 it was 6.72%. As of May 22, 2025, it has crept up a little higher, to 6.86%.

How can potential homebuyers afford a home?

Despite today’s challenges, homeownership is still within reach with the right strategy and support, Amanna says. Being flexible is key to finding a home that fits your lifestyle. This may mean choosing to live in a more affordable state.

“Being open to nearby neighborhoods or upcoming areas can lead to great opportunities,” she explains. “Don’t just think about your ideal home, think about your ideal life. Share your lifestyle goals with your real estate agent so they can find a home that fits both your budget and your vision.”

Amanna adds that real estate remains one of the best long-term ways to build wealth. “With the right approach, it’s still possible,” she says. “Many first-time buyer programs also offer low or no down payment options, which an agent can help you navigate.”

By researching affordable areas, exploring different home types and discovering new communities, you can find a home that’s both more affordable and fits your long-term goals.

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About the expert

  • Natasha Witka Amanna is a broker with Century 21 New West Properties. She’s been recognized twice with the Centurion Award, a prestigious sales award given to top-performing individual producers and high-achieving offices through Century 21.

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Natasha Burton
Natasha is a freelance writer whose work has appeared in various print and online publications, including the Washington Post, Healthline, Prevention, Forbes and Women's Health. She is the author of five relationships-focused books and a former staff writer for Cosmopolitan.com and HuffPost. When she's not at her laptop, Natasha enjoys taking hot y...
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Natasha Burton