Housing costs for new homeowners are at an all-time high with double digit home price increases over a one-year period since 2021. However, median household income has not kept pace, decreasing by 2.9% over a similar one-year period. Affording monthly home payments is challenging in today’s economy, especially when considering the non-mortgage debt that many prospective homebuyers are tackling, such as student loans and credit card debt.
To understand how much income is needed to afford home payments, we compared the 15 largest cities (where roughly 30 million people reside) across these five metrics: median home value, property tax rate, down payment, homeowners insurance and other monthly non-mortgage debt payments. Specifically, we estimated how much money you need to make – and not exceed the recommended 36% debt-to-income ratio – to afford monthly home payments.
To account for differing financial situations, we considered four scenarios: prospective homebuyers with no additional debt and those with monthly debt payments of $500, $750 and $1,000. For details on our data sources and how we put all the information together to create our final rankings, read the Data and Methodology section below.
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