Average household needs $100K to afford home. Californians need even more: study

The average American household needs a six-figure income to afford a home in 2025, according to a new study by Bankrate.

Bankrate’s Housing Affordability Study found that prospective homebuyers in the U.S. need an annual household income of about $117,000 to afford a “typical home.” That figure, researchers said, is almost a 50% increase since early 2020.

In 2020, buyers in only six states and Washington D.C. needed a six-figure income to afford a home. Now, that’s the case in more than 30 states.

The culprit, according to Bankrate, is a number of factors, including elevated mortgage rates and the overall rising costs of home prices in general.

Bankrate researchers say it’s the most difficult housing market in the U.S. in decades.

“We can’t say when these conditions will ease, but we should note that home prices and availability widely vary around the nation and even throughout larger communities or metro areas,” said Mark Hamrick, senior economic analyst for Bankrate. “Some combination of patience and flexibility is called for.”

The study was focused on the pre-tax income need to afford a median-priced, or “typical” home.

“Using median home sale price data from Redfin, homeowners insurance data from Quadrant and property tax data from ATTOM, we estimated monthly mortgage payments in all 50 U.S. states, the District of Columbia and nationwide,” Bankrate wrote on its website. “We made assumptions about the homebuyer (a 20 percent down payment, for example), then derived the minimum income needed to afford a typical home this year.”

In states where homes are already considered expensive, the required household income is even higher.

In California, for instance, you’re household will need to make nearly twice as much to meet the same criteria.

California households need to make $213,447 to afford a typical home in the state. It’s the third-highest figure, behind only Washington D.C. and Hawaii, in that order.

The top five states that require the most income are:

1. District of Columbia: $240,009
2. Hawaii: $235,638
3. California: $213,447
4. Massachusetts: $174,392
5. Colorado: $168,643

Those looking to lay down roots in other states might find their options also limited in 2025. States like Utah and Montana have seen massive increases in housing costs, with the income requirement jumping more than 80% in both states. Wyoming, Maine and Tennessee also saw “needed incomes spike” since 2020.

In some states, your money still goes quite far.

The top five states that require the least income are:

1. West Virginia: $64,179
2. Iowa: $70,437
3. Ohio: $71,080
4. Mississippi: $72,072
5. Indiana: $72,342

Bankrate has a list of tips for prospective homebuyers, including using an affordability calculator to estimate payments, monitor your credit score to see if there are ways to lower your borrowing rate, and see if you’re eligible for down payment assistance — depending on your state.

For the complete results of Bankrate’s study, as well as the full list of expert suggestions, click here.