Income Needed to Buy a Home Has Nearly Doubled: Tips to Get Ahead

If you've been thinking about buying a home lately, you've probably noticed that the financial bar has gotten significantly higher. The income required to purchase a median-priced home has nearly doubled since 2020, and this shift is reshaping the dreams of millions of potential buyers across the country.

Understanding what's changed—and more importantly, what you can do about it—is the first step toward making homeownership possible.

What Happened to Home Affordability Since 2020

The housing market experienced a perfect storm of rising prices, climbing interest rates, and stagnant wage growth. 

In 2020, the median home price was around $300,000, and mortgage rates hovered near historic lows of 2-3%. Fast forward to today, and median home prices have climbed substantially while mortgage rates have nearly doubled to 6-7% or higher. 

When you combine higher prices with higher borrowing costs, the monthly payment skyrockets—and lenders want to see that you can comfortably handle it.

Income requirements aren't arbitrary numbers that banks pull from thin air. Lenders use debt-to-income ratios to determine how much you can borrow, typically capping your housing payment at 28% of your gross monthly income. 

When monthly payments doubled or tripled due to price and rate increases, the income needed to qualify doubled right along with it. In many markets, you now need an annual income of $100,000 or more to buy what could be purchased on a $50,000-$60,000 salary just a few years ago.

This affordability crisis has hit hardest in high-cost markets and among first-time buyers who lack substantial down payment savings. Here's what's really changed:

• Median home prices increased 40-60% in many markets since 2020
• Mortgage interest rates doubled from 2-3% to 6-7%
• Monthly mortgage payments tripled or quadrupled for the same properties
• Income requirements nearly doubled, leaving many buyers priced out
• Down payment requirements represent a larger percentage of household savings
• Credit score and debt minimums have become stricter as lenders tighten standards

How to Navigate the Affordability Crisis

If you're serious about buying despite these headwinds, there are concrete tactics you can implement right now to improve your position:

1. Boost your income before applying for a mortgage. Whether through a side hustle, asking for a raise, or bringing a co-borrower into the application, increasing your documented income directly expands your borrowing power—often by $50,000 or more in total loan amount.
2. Save aggressively for a larger down payment. A 20% down payment eliminates private mortgage insurance and reduces your monthly payment substantially, lowering your income requirements. Even increasing from 10% to 15% down can make a meaningful difference in what lenders will approve.
3. Pay down existing debt before applying. Credit cards, car loans, and student loans all count against your debt-to-income ratio. Paying down $5,000 or $10,000 in consumer debt can free up room in your mortgage qualification and lower the total income you need.
4. Explore first-time buyer programs and down payment assistance. Many states, counties, and nonprofit organizations offer grants and low-interest loans specifically for first-time homebuyers. Use resources like Stack to research grants available in your area. Many programs don't require repayment and can cover 5-25% of your down payment.
5. Check the tools and resources available on our website. Visit our Tools section to access calculators, grant finders, and guides that show you exactly what programs you qualify for in your state and what your realistic mortgage approval amount might be.

Frequently Asked Questions

What's the average income needed to buy a home in 2024?

The income needed varies dramatically by location, but nationally, you typically need $80,000-$120,000 annually to qualify for a median-priced home. In high-cost cities like San Francisco or New York, six-figure incomes are often the baseline requirement.

Can I get help with a down payment if I'm a first-time buyer?

Yes. Numerous federal, state, and local programs exist specifically for first-time buyers, including grants that don't require repayment. Programs like down payment assistance grants can provide $5,000 to $50,000 or more depending on your location and income level.

Should I wait for mortgage rates to drop before buying?

Waiting for rates to fall is risky because home prices may continue climbing, potentially offsetting any rate savings. Instead, focus on getting your finances as strong as possible now, then move forward when you're ready—rates are only one piece of the affordability puzzle.

Does my credit score affect my income requirements?

Yes. A higher credit score (740 or above) typically qualifies you for better rates and more favorable lending terms, which can reduce your monthly payment and the income needed to qualify by several thousand dollars.

Next Steps for First-Time Buyers

The affordability crisis is real, but it's not insurmountable. 

Thousands of first-time buyers are still purchasing homes by taking a strategic approach: increasing income, saving down payments, managing debt, and tapping into assistance programs specifically designed to help them. The key is starting now and building momentum rather than waiting for conditions to magically improve.

Your path to homeownership begins with honest assessment of where you stand financially and concrete action steps to move forward. Explore the grants and programs available through Stack and our Tools. Many offer immediate opportunities to close the gap between where you are and where you need to be. 

With the right strategy and support, homeownership is still within reach. We'll help you get there.