The Cost of Buying a Home: What You Need to Know
FILE-A For Sale sign is displayed in front of a home in Miami, Florida. (Photo by Joe Raedle/Getty Images)
Purchasing a home is becoming even more expensive for consumers searching for housing as new data shows that having a significantly high household income is necessary to afford one.
In Bankrate’s 2025 Housing Affordability Study, data shows that homebuyers in 30 states and Washington, D.C. need at least $100,000 in annual household income to afford a typical home in their area.
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States Requiring the Most and Least Income to Buy a Home
Local perspective: Bankrate’s study listed states that require both high and low annual incomes to buy a home.
Four states and Washington, D.C. require the most annual household income to buy a home. Here are the top five below.
- District of Columbia: $240,009
- Hawaii: $235,638
- California: $213,447
- Massachusetts: $174,392
- Colorado: $168,643
Income Needed to Afford a Home by State
Meanwhile, these five states don’t require nearly the same amount of money needed to purchase a house.
- West Virginia: $64,179
- Iowa: $70,437
- Ohio: $71,080
- Mississippi: $72,072
- Indiana: $72,342
What Are Strategies Consumers Can Use to Afford a Home?
Big picture view: Buying a home may feel daunting, but it’s not impossible. And Bankrate has tips you can use whether you’re considering purchasing a house now or in the future:
- Understanding how far your income can stretch.
- Prioritizing your credit score, which determines your mortgage rate.
- Checking eligibility for down payment assistance. These programs are created for homebuyers with lower to moderate incomes.
- Consider a range of housing options.
- Be patient if you’re not ready to buy a home.
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Bankrate collected data for its study from an evaluation of the minimum annual pre-tax income a household needs to afford a median-priced home in all 50 U.S. states and the District of Columbia in 2025 compared to 2020.
The consumer financial services company also used Redfin’s median sale price data from January 2020 and January 2025 to determine homebuyers’ need to buy a home by calculating monthly mortgage payments for every state and Washington, D.C.
The Source: Information for this story was provided by Bankrate’s 2025 Housing Affordability Study, which gathered data using an evaluation of the minimum annual pre-tax income a household needs to afford a median-priced home in all 50 U.S. states and Washington, D.C. in 2025 compared to 2020. This story was reported from Washington, D.C.
Conclusion
In conclusion, the cost of buying a home is increasing, and having a high household income is necessary to afford one. However, there are strategies that consumers can use to make buying a home more affordable. By understanding how far their income can stretch, prioritizing their credit score, checking eligibility for down payment assistance, considering a range of housing options, and being patient, consumers can make their dream of owning a home a reality.
Frequently Asked Questions
Here are some frequently asked questions about buying a home:
Q: How much income do I need to buy a home?
A: The amount of income you need to buy a home varies depending on the state and the price of the home. However, according to Bankrate’s 2025 Housing Affordability Study, homebuyers in 30 states and Washington, D.C. need at least $100,000 in annual household income to afford a typical home in their area.
Q: What are some strategies I can use to afford a home?
A: Some strategies you can use to afford a home include understanding how far your income can stretch, prioritizing your credit score, checking eligibility for down payment assistance, considering a range of housing options, and being patient.
Q: How do I check my eligibility for down payment assistance?
A: You can check your eligibility for down payment assistance by contacting your local housing authority or a non-profit organization that provides down payment assistance programs.
Q: What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
A: A fixed-rate mortgage has a fixed interest rate for the entire term of the loan, while an adjustable-rate mortgage has an interest rate that can change over time.
