Home buyers ask a critical question when they start house hunting: How much house can I afford based on income? The answer is often sobering. Home prices outpaced median household income growth in all 50 states between 2015 and 2024, according to OpenTheBooks, a nonpartisan government watchdog. The median home price in 2025 was about five times the median household income, says Nadia Evangelou, principal economist and director of real estate research at the National Association of REALTORS®.
A housing mismatch is also complicating home buying. “A buyer may have the income to afford a certain price point, but if there aren’t enough homes for sale at that price, that buyer is still effectively priced out,” says Evangelou. “Households earning $75,000 can afford only about 21% of listings nationally. In a balanced market, that should be 40%.”
Home Prices Versus Household Income Over Time
This table compares median home sales prices and household income over the past 10 years. The price-to-income ratio indicates how expensive a typical home is relative to what a typical household earns.
| Year | Median Sales Price | Median Household Income | Price-to-Income Ratio |
|---|---|---|---|
| 2015 | $223,900 | $54,560 | 4.1 |
| 2016 | $235,500 | $56,190 | 4.2 |
| 2017 | $248,800 | $58,290 | 4.3 |
| 2018 | $261,600 | $60,080 | 4.4 |
| 2019 | $274,600 | $64,070 | 4.3 |
| 2020 | $300,200 | $66,070 | 4.5 |
| 2021 | $357,100 | $66,590 | 5.4 |
| 2022 | $392,800 | $70,670 | 5.6 |
| 2023 | $394,100 | $75,350 | 5.2 |
| 2024 | $412,500 | $79,350 | 5.2 |
| 2025 | $419,300 | $83,720* | 5.0 |
*Estimated income for 2025
Source: National Association of REALTORS®
Tips to Work With Your Income
Despite the challenges, experts encourage staying flexible and considering these tips.
Run Realistic Scenarios
“There is no perfect window to buy a home, with affordability tighter,” says Darcie Gore, divisional director at Chase Home Lending. She recommends talking to a lender, who “can help buyers run realistic scenarios and evaluate tradeoffs.”
A real estate agent can help you act on those findings by discussing options, including expanding the search geographically, opting for a townhouse or condo instead of a detached home, or looking at fixer-uppers. “There’s been a shift over the last decade or so, where buyers are more willing to consider something that’s not move-in ready. They see the equity potential,” says Angela Dillmon, a real estate agent at Keller Williams Chesterfield in the St. Louis metropolitan area.
Learn About Loans
The Federal Housing Administration offers loans with interest rates as low as 3.5%. “Zero percent down loans are available through U.S. Department of Veteran Affairs home loans and U.S. Department of Agriculture Rural Development Guaranteed Housing Loans for properties in certain rural and suburban areas, Dillmon says.
First-time buyer loan programs can help you qualify for better terms, depending on your situation. You may not have to be a literal first-time buyer to qualify. The U.S. Department of Housing and Urban Development offers programs to prospective buyers who haven’t owned a home in the past three years. Other buyers may be eligible if they’re divorced or legally separated and have had no ownership interest in a principal residence (other than joint ownership with a spouse) during that same three-year period. Many state, federal and local programs are available. Eligibility is typically based on income, credit score and other qualifying criteria.
A bank statement loan allows prospective buyers to use their bank statements instead of W-2s, pay stubs or tax returns. “These are great for people who are self-employed or small business owners who might not qualify for financing using just tax returns,” Dillmon says.
“An adjustable-rate mortgage, with its shorter time horizon and lower initial rate, is an option,” says Gore. An ARM starts with a fixed interest rate that changes periodically after an initial established period. At that point, market conditions can cause your interest rate and monthly payment to go up or down, creating a risk of higher payments.
Look into Family Assistance
Family members may be able to offer a down payment gift or other financial help, or participate as a co-borrower. In a recent Northwestern Mutual survey, almost 75% of parents with children at home said they were considering or planning to help a child buy a home.
Strengthen Your Credit Profile
Good credit gets you better rates and lower down payment requirements. Check your credit score and fix any errors. You can also strengthen your profile by paying bills on time, keeping credit card balances below the maximum, leaving credit cards open and not opening new ones, and paying down debt. Ask your lender if your history of on-time rent payments can be factored into your approval. For example, Fannie Mae can credit 12 months of verified rent payments toward the approval decision.
If your credit score needs improvement, don’t let that stop you. Talk to your lender or agent about options.
Focus on the Payment
When calculating payments, estimate the full monthly payment, including principal and interest, property taxes, homeowners insurance, utilities, maintenance and HOA fees if applicable. “Nationally, property taxes and homeowners insurance together represent one-fifth of a monthly payment,” says Evangelou.
The challenges are real, but there’s positive news, too. The affordability gap is shrinking, from $29,000 two years ago to $22,000 today. Homes are staying on the market a bit longer now, which gives buyers a more time for negotiating.
Dillmon advises buyers to avoid assuming they can’t afford a house and find out. “A good real estate agent will help you shake the trees for opportunities.”
Carolyn Nichols is a freelance writer focused on answering homeowners’ questions, making home ownership feel more manageable. She draws on experience uncovering and addressing the issues homeowners need to make smart decisions.
