This Is the Average 2024 Home Buyer’s Budget. Is It Enough?

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Homeownership could be pretty expensive in 2024. Read on to see what buyers anticipate spending. 

If you’re hoping to make a home purchase in 2024, you may be well aware that home prices today are pretty elevated. Throw in the fact that mortgage lenders are charging a lot for the privilege of borrowing, and a 2024 home has the potential to be quite expensive.

In fact, the average person looking to buy a home in 2024 has a budget of $313,141, according to a recent survey by Architectural Digest. Your budget, however, may be larger or smaller, depending on the type of home you’re looking to purchase and the area you’re looking to buy in.

But either way, it’s important to establish a home-buying budget that won’t leave you struggling to keep up with your housing costs after the fact. And there’s a pretty simple formula to use in that regard.

Stick to 30% of your income

As a general rule, it’s a good idea to aim to keep your monthly housing costs to 30% or less of your take-home pay. Of course, sometimes, there has to be an exception to this rule, such as if you’re buying in a large city where home prices are exorbitant. In that case, though, you may not have the expense of a car, leaving you more leeway to spend more on housing.

But assuming you’re looking to buy in a typical market, it’s best to stick to that 30% guidance. That way, you’re less likely to run into a situation where you risk falling behind on either your housing expenses or other essential bills.

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Now, when we talk about limiting your housing costs to 30% of your take-home pay or less, it’s not just your monthly mortgage payment you need to account for. Rather, that 30% limit should include all of your recurring and predictable expenses related to housing, including:

Property taxesHomeowners insuranceHomeowners association (HOA) fees, if applicable

What budget should you set for a home in 2024?

To figure out your home-buying budget, start with your take-home pay. Let’s assume that’s $6,000 a month, so 30% of that would be $1,800.

Next, let’s assume you’re not buying in an HOA but are looking at spending $2,000 a year on property taxes and $1,000 a year on homeowners insurance. That’s $250 a month you’ll need to budget for those bills, which means your mortgage payment shouldn’t exceed $1,550. From there, the amount you can afford to spend on a home will hinge on the mortgage rate you can snag and the amount of money you have for a down payment.

Let’s say you’re looking at a $250,000 home and have $50,000 for a down payment. If you lock in a 30-year mortgage at 7%, that leaves you with a monthly payment of $1,330 for principal and interest. So in this example, you’d be good to go, since we just established that you can afford to spend up to $1,550 on your monthly mortgage payment.

However, do take other expenses you face into account as well. If your child care costs are higher than usual, for example, then you may not want to spend 30% of your take-home pay on housing. Rather, you may want to limit yourself to 25%. Similarly, if you’re going back to school and will be paying tuition, you may want to stick to a lower threshold.

Ultimately, you’ll need to run your own numbers. But use that 30% guidance as a baseline to stay on the right track.

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