Owning a home is by no means inexpensive. In addition to paying a mortgage, you have to cover the cost of property taxes, insurance, and maintenance. And given the rise in home prices over the past few years, most U.S. households do not earn enough money to reasonably afford a place of their own.

It now takes an income of $107,700 to afford a new single-family home plus property taxes and insurance on it, according to a new report by Oxford Economics.

But here’s the shocking part. In 2019 — not so long ago — it only took a household income of $56,800 to afford a new home.

This means the income needed to swing a home purchase has nearly doubled in five years, which explains why so many people have been struggling to become homeowners. In fact, only 36% of households earn enough money to buy a home today.

Why homes are so much harder to afford

A couple of factors have come together to make homeownership much more expensive than it was a few years ago. First, home prices have risen. In September, the median existing home sale price was $404,500, according to the National Association of Realtors.

Secondly, mortgage rates have soared in recent years after dropping to record lows during the COVID-19 pandemic. As of this writing, the average 30-year mortgage rate is 6.78%.

Another issue would-be homeowners have grappled with in recent years is inflation. Because living costs have been so high, it’s been harder to save up funds for a down payment. That’s put many buyers in a position where they have to borrow more to finance a home — and at less affordable rates.

Don’t take on too much house

If you’re hoping to buy a home, it’s important to know what you can afford based on your salary and expenses. As a general rule, you should aim to keep your housing costs to 30% of your take-home pay or less. And that 30% threshold should include what you spend on a mortgage plus property taxes and homeowners insurance.

That said, there are steps you can take to find a more affordable mortgage. One is to boost your credit score before applying, which you can do by paying bills on time and keeping outstanding credit card balances as low as you can.

Also, shop around for a mortgage, since you never know when one lender might offer you a much better deal than another. You can start with this list of the best mortgage lenders.

It may or may not shock you to learn that it takes a salary of about $108,000 to own a home in the U.S. today on average. If your salary isn’t close to this, you don’t necessarily have to write off homeownership, especially if you live in an inexpensive area. Housing prices could come down in time, and so could mortgage rates. And you can potentially make up for a lower salary with a higher down payment. But aim to stick to that 30% threshold either way, so you don’t wind up in over your head.

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