Here’s the Salary It Takes to Buy a Home Today

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Buying a home is an expensive prospect. Read on to see how much income you might need. 

There’s a reason so many would-be buyers have struggled to enter the housing market in 2023. Not only have mortgages been expensive to sign, but home prices have been elevated, largely due to a glaring lack of inventory.

Now, the amount of money you’ll need to earn to buy a home will depend on where you want to live and the cost of properties there. But you may be curious as to what it takes to buy a median-priced home today. And the number might shock you.

You need a six-figure income for a median home today

Home buyers today need to earn $114,627 to afford the median-priced U.S. home, according to a new report from Redfin. That’s a 15% increase from a year ago.

To put it another way, a buyer today needs to earn $15,285 more than they did a year ago to afford a median home. And buyers need 50% more income to afford a median home compared to the start of the pandemic.

How much house can you afford?

There’s a general home affordability rule that buyers are advised to follow: Your housing costs should not exceed 30% of your take-home pay. In some markets where home prices are incredibly high, following this rule may not be possible. But it’s optimal to keep your housing costs to 30% of your pay or less so you have plenty of wiggle room to cover your various expenses.

To be clear, though, that 30% should include your mortgage payments as well as peripheral homeownership expenses like property taxes, homeowners insurance, and homeowners association fees, if applicable. Don’t just consider your mortgage alone.

That said, while 30% is the general rule of thumb when determining home affordability, if you have certain expenses that are higher than average or a lot of existing debt, then you may want to limit yourself to a smaller percentage of your pay.

For example, perhaps you have three kids in full-time daycare while you and your spouse work. Even if your combined income is enough to afford a home in your area, you may be spending so much on daycare that you really can’t comfortably swing a home purchase.

Similarly, you might have a lot of debt you’re trying to pay off. In that case, you’d potentially want to keep your housing costs to less than 30% of your pay so you can continue to chip away at your debt.

Affordability isn’t the only thing to think about

Maybe you technically earn enough to buy a median-priced home in your neighborhood. You might even earn enough to buy one of the more expensive homes in your neck of the woods. But just because you can afford to buy doesn’t mean that you should.

The more money you spend on housing, the less you’ll have available for other things. You don’t want to end up in a situation where you’re sinking so much of your income into housing that there’s little to no money left over to do other things that are important to you, like travel or enjoy hobbies.

All told, it takes a lot more money today to afford a home than it did in the past. In the coming years, that could change if home prices start to come down and mortgage rates follow suit. But if you’re eager to buy a home today, make sure to run your numbers carefully and consider your overall financial picture before moving forward with an offer.

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