Here’s How Much House You Can Afford If You Make the Median US Salary

Comparison may be the thief of joy, but let’s be real: everyone does it, especially when it comes to finances. In some cases, looking at financial data can help you determine whether you’re underpaid and understand what you can afford. 

For example, looking at the latest Bureau of Labor Statistics (BLS) data on median weekly earnings can provide a good benchmark for your wages. And comparing that to average home prices can help you gauge if buying a home is affordable on your salary. 

The latest BLS data shows the median full-time worker in the U.S. earns $1,192 per week. That translates to $61,984 if working all 52 weeks of the year, though keep in mind that hourly workers who take unpaid time off might earn less as a result.

Although that’s a 4.1% increase over the year prior and a larger gain than the overall inflation rate, average wages haven’t risen enough to make average home prices affordable.

The average home value in the US is $356,585, according to Zillow. While that’s only a 2.6% gain since a year ago, average home prices rose so fast in the recent past—by over $100,000 from mid-2019 to mid-2022—that wages need more time and/or a faster pace to catch up.

Suppose you put down 20% and took out a 30-year mortgage at the average interest rate of 6.98%, according to the latest Zillow data. That means your monthly housing payment would be about $2,230, including estimated property taxes and home insurance.

So, can you afford $2,230 per month if you are earning $1,192 per week?

The short answer is no. At first glance, it may seem like a yes, as the monthly payment is less than half of your monthly earnings. But once you factor in taxes, car payments, groceries, and other living expenses even spending 40% of your monthly paycheck on housing could mean stretching yourself too thin. 

Instead, consider the 28/36 rule of thumb, where your total housing costs are no more than 28% of your gross monthly earnings, and your total debt costs do not exceed 36% (that includes the mortgage debt). 

If you spent $2,230 per month on housing, then your gross weekly earnings would need to be about $1,833, or $95,315 per year, to stay within that 28% mark. In other words, you need to earn over 50% more per week than the average worker currently makes to afford the average U.S. home.

Earning $61,984 Per Year Could Make Buying a Home Tough—Except in This State

One way to afford an average home on an average salary is to move. That’s easier for some than others, and it could affect your earnings, but it could also be the perfect solution for remote workers. In West Virginia, for example, the average home value is $166,629, less than half the national average, according to Zillow.

Based on average mortgage and property tax rates in the state of West Virginia, buying the average home with a 20% down payment would result in a monthly housing payment of about $1,091.

That means the housing payment would only be about 21.1% of monthly gross earnings if you’re earning the national average. However, even if you took a pay cut to move to West Virginia, you may be able to get by. You could afford the average payment as long as you earn about $3,900 every month—about $898 per week. 

That said, you’d need to save up $33,326 for the 20% down payment on that average home in West Virginia, otherwise costs would be higher. If you saved $100 per week, it would take about six and a half years to hit that down payment amount, although earning interest through a high-yield savings account or investment returns could quicken that pace.

While West Virginia is the most affordable, the math could work in a few other low-cost states, such as Louisiana, Mississippi, and Oklahoma. However, it still depends on factors such as if your wages differ based on the local job market, as well as where in these states you buy.

How to Know If You Can Afford a Home on an Average Salary

While the 28/36 rule can be a good guide for understanding if you can afford your monthly housing payment, it’s a little complex to calculate. If you want to do some math in your head, an easier rule of thumb is that your total mortgage amount should be no more than 2 to 2.5 times your annual salary. 

So, if you earn about $62,000 per year, the maximum mortgage you can afford would be around $124,000 to $155,000. This is a conservative estimate because the total home price would likely be under $200,000 after accounting for the 20% down payment. 

Still, this doesn’t tell you the whole story, as factors like the interest rate make a big difference as to whether you can comfortably afford the monthly payment. 

Ultimately, buying a home in the U.S. isn’t easy right now. Wages aren’t aligning with average home prices and mortgage rates are still relatively high compared to recent years.

If you do want to make homeownership more attainable, your best option might be to choose a low-cost area, taking into account not only housing prices but also average mortgage rates, insurance costs, and property taxes, along with local wages if you’re not a remote worker. 

Changes like boosting your credit score can also help you qualify for a lower mortgage rate, but that alone might not be enough of a difference. Instead, you might need to combine that with finding a below-average-priced home, or you might try waiting to see if mortgage rates fall more substantially. Getting a raise above the median or earning a side income also makes the average mortgage more palatable, especially if it enables you to save for a larger down payment.

How We Track Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2024. Use is subject to the Zillow Terms of Use.