Real Estate 2024: Here’s the Income You Need To Afford a $500K Home in Every State

If you want to enter the real estate market, you’ve probably already looked into the calculations to determine how much you would need to save up for a 20% down payment and estimate your monthly mortgage payments. Before you apply for a mortgage, you want to ensure that you have the income and savings required to purchase a home to ensure you can afford to become a homeowner. We will break down the current real estate market and determine the income needed to afford a $500,000 home in every state.

When interest rates dropped during the pandemic, home prices skyrocketed as many used this as an opportunity to enter the real estate market. However, the current real estate market is drastically different from the scenario in 2020.

According to the National Association of Realtors (NAR), existing home sales went up 3.1% in January from December 2023, but sales are down 1.7% from one year ago. The country’s median sale price was $379,100, a record high for January and an increase of 5.1% from just one year ago. First-time homebuyers made up 28% of sales in January, dropping from 29% in December. 

Inventory for January was at a three-month supply, which means we’re currently in a seller’s market. The low inventory is an issue for potential buyers nationwide because a supply of five to six months is needed for a balanced market. 

As of January, about 89% of those with a mortgage have a rate lower than 6%, according to Redfin. This means that most homeowners are paying less than the current mortgage rate, which means they’re not likely to sell because they may not want to purchase another home with a higher interest rate. This impacts the housing market since inventory is lower than normal, and the supply issues keep housing prices high. Those looking to enter the real estate market struggle because they either can’t find the home they want or save up enough for a down payment. 

With the aggressive rate hike campaign from the Federal Reserve in an attempt to cool down soaring inflation, home ownership has become more expensive. The combination of higher mortgage payments and limited inventory is causing frustrations. 

While it’s difficult to predict what will happen to the market in 2024, many experts are waiting to see if the Fed will drop rates to make mortgage payments more affordable. If the rates drop significantly in 2024, there’s a chance that more homeowners would be willing to sell, which would address the supply issues. 

To determine the income you need to afford a $500,000 home in every state, GOBankingRates compiled data. We will break down the income you need to afford a $500,000 home in every state, along with your monthly mortgage. 

• Mortgage: $2,801
• Minimum income needed for 20% down payment: $112,043

• Mortgage: $3,068
• Minimum income needed for 20% down payment: $122,709

• Mortgage: $2,897
• Minimum income needed for 20% down payment: $115,876

• Mortgage: $2,901
• Minimum income needed for 20% down payment: $116,043

• Mortgage: $2,947
• Minimum income needed for 20% down payment: $117,876

• Mortgage: $2,864
• Minimum income needed for 20% down payment: $114,543

• Mortgage: $3,380
• Minimum income needed for 20% down payment: $135,209

• Mortgage: $2,889
• Minimum income needed for 20% down payment: $115,543

• Mortgage: $3,014
• Minimum income needed for 20% down payment: $120,543

• Mortgage: $3,018
• Minimum income needed for 20% down payment: $120,709

• Mortgage: $2,768
• Minimum income needed for 20% down payment: $110,709

• Mortgage: $2,914
• Minimum income needed for 20% down payment: $116,543

• Mortgage: $3,501
• Minimum income needed for 20% down payment: $140,043

• Mortgage: $2,984
• Minimum income needed for 20% down payment: $119,376

• Mortgage: $3,268
• Minimum income needed for 20% down payment: $130,709

• Mortgage: $3,193
• Minimum income needed for 20% down payment: $127,709

• Mortgage: $2,980
• Minimum income needed for 20% down payment: $119,209

• Mortgage: $2,867
• Minimum income needed for 20% down payment: $114,709

• Mortgage: $3,151
• Minimum income needed for 20% down payment: $126,043

• Mortgage: $3,072
• Minimum income needed for 20% down payment: $122,876

• Mortgage: $3,109
• Minimum income needed for 20% down payment: $124,376

• Mortgage: $3,209
• Minimum income needed for 20% down payment: $128,376

• Mortgage: $3,097
• Minimum income needed for 20% down payment: $123,876

• Mortgage: $2,914
• Minimum income needed for 20% down payment: $116,543

• Mortgage: $3,055
• Minimum income needed for 20% down payment: $122,209

• Mortgage: $2,943
• Minimum income needed for 20% down payment: $117,709

• Mortgage: $3,314
• Minimum income needed for 20% down payment: $132,543

• Mortgage: $2,880
• Minimum income needed for 20% down payment: $115,209

• Mortgage: $3,439
• Minimum income needed for 20% down payment: $137,543

• Mortgage: $3,564
• Minimum income needed for 20% down payment: $142,543

• Mortgage: $2,914
• Minimum income needed for 20% down payment: $116,543

• Mortgage: $3,218
• Minimum income needed for 20% down payment: $128,709

• Mortgage: $2,976
• Minimum income needed for 20% down payment: $119,043

• Mortgage: $3,043
• Minimum income needed for 20% down payment: $121,709

• Mortgage: $3,927
• Minimum income needed for 20% down payment: $131,876

• Mortgage: $3,005
• Minimum income needed for 20% down payment: $120,209

• Mortgage: $3,022
• Minimum income needed for 20% down payment: $120,876

• Mortgage: $3,255
• Minimum income needed for 20% down payment: $130,209

• Mortgage: $3,218
• Minimum income needed for 20% down payment: $128,709

• Mortgage: $2,872
• Minimum income needed for 20% down payment: $114,876

• Mortgage: $3,122
• Minimum income needed for 20% down payment: $124,876

• Mortgage: $2,914
• Minimum income needed for 20% down payment: $116,543

• Mortgage: $3,334
• Minimum income needed for 20% down payment: $133,876

• Mortgage: $2,872
• Minimum income needed for 20% down payment: $114,876

• Mortgage: $3,397
• Minimum income needed for 20% down payment: $113,876

• Mortgage: $2,997
• Minimum income needed for 20% down payment: $119,876

• Mortgage: $2,997
• Minimum income needed for 20% down payment: $119,876

• Mortgage: $2,872
• Minimum income needed for 20% down payment: $114,876

• Mortgage: $3,305
• Minimum income needed for 20% down payment: $132,209

• Mortgage: $2,868
• Minimum income needed for 20% down payment: $114,709

Methodology: To find How Much Income Do You Need To Buy a $500K Home in every state, GoBankingRates found the National 30-year Fixed Rate for a mortgage sourced from Federal Reserve Economic Research (6.90%). The property taxes for each state were also collected and sourced from the Tax Foundation. Then GOBankingRates calculated the annual mortgage cost if someone put a 5% downpayment, 10% downpayment, 15% downpayment, and 20% downpayment on a $500,000 home mortgage. Using the property tax as well as the calculated mortgage options, a yearly cost can be estimated for each state. Most financial experts suggest that your housing costs should not be over 30% of your salary, so GOBankingRates calculated the income required to pay for a $500k home mortgage assuming the yearly mortgage costs are no more than 30% of expenses. All data was collected and is up to date as of May 14, 2024.