You Need to Make This Much Money Per Year to Comfortably Afford a $360,000 Home

 

 

• The value of the average home in the United States was $359,099 as of Oct. 31, according to Zillow.
• To comfortably afford the monthly mortgage payment of a home costing that much, you’d need to earn at least $79,120 a year, which is more than the median annual earnings of full-time workers in the U.S.
• The rule of thumb is to spend no more than 28% of your gross monthly income on housing costs and no more than 36% on recurring monthly debts.

The average home value in the U.S. stood at $359,099 as of Oct. 31, according to Zillow.1 How much do you have to earn each year to afford the mortgage payment that comes with that home?

That depends on several factors. But if you took out a 30-year, fixed-rate mortgage with an interest rate of 6.66% and had a down payment of 20%, your monthly mortgage payment would be $1,846.13, not counting the costs of property taxes or home insurance.

So what monthly income would you need to be able to comfortably afford that mortgage payment? 

 

You Need an Income of $79,120 to Afford a $359,099 Home

To afford that monthly mortgage payment, you’d need an annual household income of about $79,120, and here’s why: When determining how much of a mortgage payment—and home—you can afford, it’s helpful to start with the 28/36 rule.

According to this rule, a household should spend no more than 28% of its gross monthly income—its income before taxes are taken out—on housing costs.

You should also spend no more than 36% of your gross monthly income on all monthly recurring debts: mortgage, student, auto, personal loans, or any minimum monthly credit card payments. It also includes any alimony or child support payments you are making. By following this formula, you should have enough money after paying these debts to afford groceries, utility bills, phone bills, transportation, medical costs, and other expenses that fluctuate each month.

That monthly mortgage payment of $1,846.13 comes to $22,153.56 a year in mortgage payments. To determine the annual income you need to afford that payment if you are following the 28% rule, divide that amount by 0.28—or 28%—to get $79,119.86. Of course, that’s also first paying the 20% down payment on the house—about $72,000.

Average Household Incomes Can Just Afford This Mortgage

An annual household income of $79,120 is more than the median annual earnings of full-time workers in the U.S. The median weekly earnings of full-time workers in the U.S. stood at $1,165 in the third quarter of 2024, according to the Bureau of Labor Statistics.2 That equals a median annual salary of $60,580, or about $19,000 less than the recommended household income you would need to comfortably afford a $359,099 home.

It’s easier to afford that average U.S. home if you aren’t the only wage earner in your household. An annual income of $79,120 a year is slightly lower than the real median household income of $80,610 as measured by the U.S. Census Bureau in 2023. According to this measure, which calculates the income of all members of a household, those earning the median household income last year could afford that $359,099 home.

Remember These Other Costs

Owning a home involves more than just the principal and interest payments on your mortgage. You’ll also have to include the costs of property taxes and home insurance, which most mortgage lenders require as part of your monthly payment. 

Those costs vary depending on several factors, so let’s say, as an example, your mortgage payment on a $359,099 home comes to $2,400 when you add taxes and insurance to your payment. Multiplying that by 12 means you’ll pay $28,800 a year in mortgage payments. Divide that by 0.28 to come up with about $102,857, the amount your household would need to earn in a year to comfortably afford that monthly payment (principal, interest, insurance, and taxes).

You’ll also need to factor in home maintenance, which cost an average of $2,458 a year in 2023, according to Angi’s State of Home Spending report.3 Your home maintenance costs won’t be part of your monthly mortgage payment, but you should consider them when deciding how much home you can afford to buy.

 

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