Salary Needed to Maintain and Purchase Home In U.S.

How Much Salary Do You Really Need to Buy and Maintain a Home in the U.S.?

For many Americans, buying a home is a major financial milestone—but it’s also one of the most complex purchases you’ll ever make. Determining “How much income do I need?” is more than looking at a home listing’s price tag. You’ve got to factor mortgage rates, taxes, insurance, maintenance, and more.
In this post, we’ll break down:

• The classic affordability rules and ratios
• How market conditions are stretching those rules
• A worked example to show real numbers
• Ongoing costs of homeownership
• Common adjustments and what to watch out for
• How to use this framework for your own market

Traditional Affordability Rules & Ratios

The 28/36 Rule (Front-End / Back-End Ratios)

A long-standing guideline in mortgage underwriting is the 28/36 rule. In simplest terms:

• Front-end (housing) ratio: Your housing costs (mortgage principal & interest, property taxes, insurance — often labeled “PITI”) should not exceed 28% of your gross monthly income. Bankrate+2Rocket Mortgage+2
• Back-end (total debt) ratio: All your monthly debt obligations (housing + car payments, student loans, credit cards, etc.) should not exceed 36% of your gross income. Bankrate+2Investopedia+2

Lenders sometimes allow flexibility (e.g. approving up to 43–45% DTI in certain cases), but the 28/36 rule remains a solid benchmark. Bankrate+3Bankrate+3Rocket Mortgage+3

Multiples of Income Rule

Another simpler “rule of thumb” is that the mortgage (loan amount) should be no more than 2 to 3 times your annual gross income. FDIC+2Fidelity+2

For example, someone earning $100,000/year might aim for a home priced between $200,000 to $300,000 (assuming sufficient down payment, manageable debt, etc.). But that rule doesn’t account for local taxes, insurance, interest rates, or maintenance.
The 30% Rule & Housing StressFinancial planners often point to a simpler guideline: keep total housing costs (rent or mortgage) under 30% of your gross income. That leaves room for other expenses and avoids “housing stress.” Bank at First+1

Yet, in many U.S. markets today, home prices and mortgage rates have pushed required housing costs well above 30% of median incomes. In fact, as of mid-2025, many households would need to spend ~44.6% of their income to afford the median home, well beyond the “safe” range. Media | Move, Inc.

How Market Shifts Are Stretching the Rules

The traditional rules worked better when home prices and interest rates were more stable and affordable. But over recent years, two trends are making them harder to adhere to:

1. Rising home prices — the median U.S. home price has climbed sharply.
2. Elevated mortgage rates — when interest rates rise, monthly costs for the same loan amount increase.

Because of this, many buyers find themselves needing a much higher income than in past decades just to stay within the “acceptable” budget boundaries. For instance, a recent report found a buyer now needs to earn at least $114,000 annually to afford the national median home price, assuming 20% down and assuming housing costs stay under 30% of income. AP News

So while the rules are useful, real market conditions often force buyers to “stretch” or adjust: accepting higher ratios, choosing smaller homes, or committing to higher debt burdens than would be ideal.

Example: Doing the Math for Your Market

Let’s walk through a hypothetical to see how this works in practice.
Scenario:

• You’re in a market where the median home price is $400,000
• You plan a 20% down payment ($80,000), so you’ll finance $320,000
• Mortgage rate: 6.5% fixed, 30-year term
• Annual property taxes + insurance: estimate ~1.5% of home value = $6,000/year → $500/month
• Maintenance, HOA, etc.: assume $300/month
• Other debts (car, student loans, credit cards) = $500/month

Step 1: Estimate principal & interest

A $320,000 mortgage at 6.5% over 30 years yields a monthly payment (principal + interest) around $2,024 (approximate).
Then add taxes/insurance ($500) and maintenance/HOA ($300) → total housing cost = $2,824/month.

Step 2: Back-calculate required gross income

If you want housing to be ≤ 28% of gross income:

• 2,824÷0.28=10,0852,824 ÷ 0.28 = 10,0852,824÷0.28=10,085 → you need gross monthly income of $10,085 → that’s about $121,000 per year

Then check debt ratio: add your other debts ($500) → total debt = $3,324. You’ll want that under 36% of income:

• 3,324÷0.36=9,2333,324 ÷ 0.36 = 9,2333,324÷0.36=9,233 → suggests gross monthly of ~$9,233 → ~$111,000/year

So the housing side is more restrictive. Under these assumptions, you’d need a salary of ~$121,000/year to “comfortably” afford that $400,000 home under traditional rules.
Note: If the mortgage rate was lower, or the taxes/insurance were less, or you used a smaller loan or lower maintenance, that required income would drop.

Ongoing Costs: Buying the Home Isn’t the Only CostOnce you own a home, the costs don’t stop. That’s why accurate budgeting must include:

• Property taxes (often rise over time)
• Homeowners insurance and possibly flood / hazard insurance
• Maintenance & repairs — a general rule is to budget 1% to 2% of home value per year
• Utilities and energy costs (heating, cooling, water, power)
• HOA fees or shared services
• Improvements, landscaping, ground upkeep, pest control
• Reserves for unexpected repair (roof, HVAC, plumbing, structural)

These costs can erode your buffer quickly, especially if housing costs already push your income limits.

Adjustments & Real-World Considerations

Because real life is messier than models, here are key adjustments and real-world caveats to consider:

1. Interest Rates Matter Big

A 1% change in mortgage rate can move monthly payment significantly — making or breaking affordability. Always test scenarios (e.g. 6% vs 7% vs 7.5%).

2. Down Payment Size

Larger down payments reduce the loan amount and thus monthly cost — improving affordability. Also avoids or reduces Private Mortgage Insurance (PMI).

3. Local Taxes & Insurance Variation

Regions with high property taxes (or distinct insurance risks like wind, flood, fire) may require much higher income to afford the same nominal home price.

4. Debt Load & Credit

If you have high existing debt, your debt-to-income ratio will bite you. Lowering other debts or boosting income helps your capacity.

5. Market Flexibility & Trade-offs

You may choose a smaller home, a condo (lower maintenance), or lower-cost neighborhoods to bring the needed salary down.

6. Lender Overlays & Qualification Rules

Some lenders impose stricter limits (e.g. 28% housing, 36% DTI) or require “reserves” (extra months of payments in savings).

7. Stretching Ratios in Tight Markets

In overheated markets, many buyers exceed 28% or even 30% housing payment levels. But that increases financial risk — less buffer for emergencies, economic shocks, or rate increases.

8. Future Increases

Taxes, insurance, utility rates, and maintenance will trend upward over time. Ensure your budget can absorb increases.

Using This Framework in Your Own Market

​To apply this in your area:

1. Get current median home price in your city / county
2. Estimate interest rate, taxes, insurance, maintenance
3. Subtract those costs from target payment to get your “housing budget”
4. Apply the 28% rule (or your comfort threshold) to find income needed
5. Run “stress tests” (higher rates, increased taxes) to see what salary gives you margin
6. Compare with area incomes: is it realistic or out of reach?

For example, in many U.S. metros, the income needed to afford the median home now exceeds what the median household actually earns — in those markets, aspiring buyers either need to stretch, reduce expectations, or save longer. Media | Move, Inc.+1

Conclusion: What Salary You Need vs What’s Realistic

• Traditional rules suggest housing should cost ≤ 28% of gross income, and total debts ≤ 36%.
• A more flexible “30% rule” is common in budgeting.
• But rising home prices and mortgage rates are pushing many buyers beyond those safe ratios — recent data shows median households would need to spend nearly 45% of income to afford the median home. Media | Move, Inc.
• A sample scenario showed needing ~$121,000/year to afford a $400,000 home under those rules (with typical taxes, insurance, maintenance).
• Always build in buffers, test “what if” scenarios, and examine your other debt obligations.