How Much Income Do First-Time Buyers Need to Afford a Starter Home?
Rising sales prices and mortgage rates mean today's first-time buyers need to earn more to afford a home
Jan. 14, 2025
Home sales froze at the tail end of last year, and with mortgage rates continuing to increase, purchasing a home will likely remain a challenge in 2025. With mortgage rates rapidly rising to nearly 7% again, the median income needed to afford a starter home in the U.S. has bumped up to $70,164, according to real estate marketing platform Realtor.com. This is an increase of more than 100% from 2019’s $32,357. At the same time, home prices have grown significantly over the past five years, to $292,950 in 2024, compared with just $190,559 in 2019.
Monthly payments on the typical starter home have risen 116% from five years earlier, to $1,754 at 2024 prices and a 7% mortgage rate. To be considered affordable, home payments typically should eat up no more than 30% of household income.Read more