To buy a typical home in the U.S. in 2025, you generally need an annual household income of around $117,000 to $119,000. This figure is based on the median home price and assumes a 20% down payment and that housing costs should not exceed about 30% of your pre-tax income
Key Points:
- The median home price in early 2025 is roughly $414,000 to $431,000.
- To afford this, a household needs an income of approximately $114,000 to $119,000 annually.
- This income requirement has risen significantly-about 50% to 70%-compared to 2020, when the needed income was closer to $78,000.
- The rise is due to higher home prices and elevated mortgage rates.
- In many states, especially expensive ones like Hawaii, the required income can be much higher (e.g., $229,000 in Hawaii for a median home)
- In more affordable states like West Virginia, the needed income can be as low as around $71,000
Additional Considerations:
- A 20% down payment is typical to avoid private mortgage insurance, which for a $414,500 home would be about $82,900.
- Closing costs add another 2% to 5% of the home price.
- Monthly mortgage payments depend on interest rates; for example, a 5% rate on a $414,500 home with 10% down results in about $2,600 monthly payments, rising to about $3,100 at a 7% rate
- Many buyers spend no more than 28-30% of their gross income on housing costs, including mortgage, taxes, and insurance
Summary:
To buy a typical home in the U.S. today, you need a six-figure income, generally around $115,000 annually, though this varies widely by location and home price. Lower incomes can still buy homes in less expensive areas or with assistance programs, but nationwide affordability challenges remain significant
