Understanding Income Thresholds in Today’s Housing Market 

The New Reality of Homeownership

Buying a home has always been a milestone—but in today’s market, it’s starting to feel like a moonshot. With mortgage rates hovering near 7%, and home prices still climbing, many buyers are asking: Can I still afford to buy?

This blog breaks down the income needed to afford a median-priced home in 2021 vs. 2024, using data from Redfin, Clever Real Estate, and the Urban Institute. We’ll explore how affordability has shifted, what it means for first-time buyers, and how to navigate the gap with smart strategies.

Income Needed to Afford a Median-Priced Home (2021 vs. 2024)

What’s Driving the Affordability Gap?

1. Mortgage Rates

Rates rose from 2.65% in early 2021 to nearly 8% in late 2023. Even though they’ve dipped slightly in 2024, monthly payments remain high.

• A $400K loan at 2.65% = ~$1,612/month

• At 7.5% = ~$2,877/month

• That’s a 78% increase in payment

2. Home Price Growth

Despite rate hikes, prices haven’t dropped significantly. In fact, the median home price rose 10% from 2021 to 2024.

3. Stagnant Wage Growth

While incomes have increased modestly, they haven’t kept pace with housing costs. The result? A widening affordability gap.

What Does “Affordable” Actually Mean?

Most experts use the 30% rule: housing costs (including mortgage, taxes, and insurance) shouldn’t exceed 30% of gross monthly income.

Let’s break that down:

• Median monthly payment in 2024: $2,838

• To stay under 30%, a buyer needs to earn ~$113,520/year

• Median income: $84,072

• Result: 35% of income goes to housing—well above the recommended threshold

Who Can Still Buy?

Despite the challenges, many buyers are still finding paths to homeownership. Here’s who’s most likely to succeed:

1. Dual-Income Households

Couples combining incomes can more easily meet the threshold. According to NAR, 68% of buyers in 2024 were couples.

2. Buyers in Affordable Metros

Cities like Pittsburgh, Cleveland, and Indianapolis offer median-priced homes that align with median incomes.

3. Buyers with Large Down Payments

Putting down 20% or more reduces monthly payments and improves loan terms.

4. Buyers Using Assistance Programs

State and federal programs offer down payment help, reduced interest rates, and tax credits.

Local Snapshot: Aurora & Oswego, IL

Affordability is tight but not impossible.

• Median home price: ~$348,000

• 20% down = $69,600

• Loan amount: $278,400

• At 6.75%, monthly payment ≈ $1,805

• Income needed: ~$72,200/year

Insight: Buyers earning $75K+ with minimal debt can still afford entry-level homes—especially with strategic negotiation or assistance.

Strategies to Bridge the Gap

1. Buy Down the Rate

Negotiate with sellers to cover points that lower your interest rate. A 1% rate reduction can save hundreds monthly.

2. Explore Loan Programs

FHA, VA, and USDA loans offer lower down payments and flexible credit requirements.

3. Consider Smaller Homes or Condos

Downsizing can reduce costs and open doors to ownership.

4. Use a Local Agent Who Understands the Math

Agents who know how to structure offers around affordability can make a huge difference.

Empowerment Through Information

Affordability isn’t just about income—it’s about strategy. By understanding the numbers, exploring options, and working with the right professionals, buyers can still achieve homeownership—even in a high-rate market.

If you’re ready to explore your options, I’m here to help. Let’s run the numbers, review programs, and find a home that fits your budget and your goals.

Sources: 

Brannon, Matt. “How Much Income It Takes to Afford the Average Home (2024).” Clever Real Estate, 22 Apr. 2024, https://listwithclever.com/research/how-much-house-can-i-afford-2024/ 

Consumer Financial Protection Bureau. “2024 HMDA Data on Mortgage Lending Now Available.” Consumer Financial Protection Bureau, 31 Mar. 2025, https://www.consumerfinance.gov/about-us/newsroom/2024-hmda-data-on-mortgage-lending-now-available/ 

Redfin. “United States Housing Market & Prices.” Redfin, July 2025, https://www.redfin.com/us-housing-market 

Urban Institute. “Affordability.” Urban Institute, 2025, https://www.urban.org/affordability