A new Bankrate study finds the average U.S. household now needs a six-figure income to afford a home in 2025. In high-cost states like California, the required earnings are even higher.
Bankrate’s study reveals U.S. homebuyers now need roughly $117,000 annually to afford a typical home—a nearly 50% jump since 2020. Soaring prices and mortgage rates have dramatically raised the income threshold for ownership. In high-cost markets like California, the required earnings are even steeper.
Just six states and D.C. required six-figure incomes for homebuyers in 2020—now over 30 states do. Surging housing costs have made homeownership far less affordable nationwide.
Bankrate blames soaring home prices and high mortgage rates for the affordability crisis, alongside other economic pressures squeezing buyers.
Bankrate researchers say it’s the most difficult housing market in the U.S. in decades.
“Market conditions remain uncertain, with home prices and inventory varying significantly by region,” said Bankrate’s Mark Hamrick.
“While we can’t predict when relief will come, buyers may need both patience and flexibility,” he added, noting local market differences.
The study was focused on the pre-tax income need to afford a median-priced, or “typical” home.
Bankrate estimated monthly mortgage payments across all 50 states and D.C. using median home prices (Redfin), insurance (Quadrant), and property taxes (ATTOM). They assumed a 20% down payment and calculated the minimum income needed to afford a typical home. The analysis aimed to determine affordability for homebuyers this year.
In expensive states like California, the required income is far higher—nearly double the national average. Homebuyers there must earn significantly more to afford a typical home. High costs push affordability further out of reach for many.
California requires a household income of $213,447 to afford a typical home—the third-highest in the U.S., trailing only D.C. and Hawaii. High costs make homeownership a steep challenge in these markets.
The top five states that require the most income are:
- District of Columbia: $240,009
- Hawaii: $235,638
- California: $213,447
- Massachusetts: $174,392
- Colorado: $168,643
Homebuyers in 2025 may face limited affordability even outside traditional high-cost states. Utah and Montana have seen income requirements surge over 80%, while Wyoming, Maine, and Tennessee also experienced sharp spikes. Rising housing costs are reshaping affordability nationwide.
In some states, your money still goes quite far.
The top five states that require the least income are:
- West Virginia: $64,179
- Iowa: $70,437
- Ohio: $71,080
- Mississippi: $72,072
- Indiana: $72,342
Bankrate advises homebuyers to use affordability calculators, check their credit score for better rates, and explore down payment assistance programs. These steps can help navigate today’s challenging housing market. Planning ahead is key to making homeownership more attainable.
