For the first time in four years, housing affordability in the U.S. didn’t get worse♔ in 2024, but that doesnꦬ’t mean homebuying is easy—at least for most people.

A household earning the median income and buying a median-priced home in 2024 would have had to spend 41.8% of their income (compared with 42.2% in 2023), according to a recent report from Redfin. However, that’s stiജll a far higher percentage of income than many buyers are wi𓂃lling to pay. And it’s higher than experts recommend.

Most lenders hesitate to issue a mortgage payment exceeding 澳洲幸运5开奖号码历史查询:28% of the buyer’s take-home pay. But with housing prices and 澳洲幸运5开奖号码历史查询:mortgage interest rates where they currently stand, it’s difficult to purchase a home under these guidelines in 澳洲幸运5开奖号码历史查询:many metro areas. The Redfin report notes that in order to spend no more than 30% of your income on housing, a household would need to bring in at least $116,782 per year. However, only 39% of households make over six figures annually, making homeownership out of reach for most U.S. adults.

So, should you stretch your bu𝔍dget to own a home?

Are You Spending Too Much on Housing?

Even if you cꦜan get🌼 approved for a mortgage that costs more than 30% of your monthly income, is it a good idea to take it? Let’s look at a mortgage in the context of the larger view of personal finance.

One popular and simple method of budgeting is the 澳洲幸运5开奖号码历史查询:50/30/20 rule. This states that 50% of your income goes to necessities (shelter, food, medical care, transportation, debt payments), 30% goes to wants (eating out, vacations, entertainment), and the remaining 20% goes to savings (retirement, emergency funds, etc.).&nꦅbsp;

For example, if your household earns a median income of about $84,000, your necessities should cost around $3,500 per month, wants should be $2,100, and savings should be $1,400. However, if you purchased a median-priced $430,000 home at the 澳洲幸运5开奖号码历史查询:cꦇurrent 🐓average mortgage rate of 6.99%, the principal and interest alone would be $2,286 (assuming you made a 20% down payment). According to the 50/30/20 rule, that would leave you only🅰 $1,214 for homeowners insurance, property taxes, utilities, food, health care, and other necessities. 

If you take on a mortgage that eats up that percentage of your income, it’s unlikely that you can keep the rest of your nonnegotiable expenses low enough to stay in the 50% range—especially if you have to pay other debts on top of regular household exp🧜enses (like student loans or credit card debt).

Save More by Getting Creative With your Housing

While every homebuying situation will be different, it’s clear from the average figures that the prospect of the average U.S. household owning an average home is bleak. However, you can potentially improve your odds of affording a home🌟 in several ways. Here are a few ideas to consider:

• Refinance: The Fed is expected to make 澳洲幸运5开奖号码历史查询:more modest interest cuts in 2025 and into the coming years. If you can squeeze in a higher mortgage payment for the next couple of years, relief could be on the horizon if you can refinance once interest rates drop.
• Cut back elsewhere: If you can’t keep your essential spending within the 50% guideline, you can still make your budget work by cutting back on discretionary spending or scaling back your savings. Just keep in mind that these adjustments impact your lifestyle—both now and in retirement.
• Move to a more affordable area: The average home price in the U.S. is about $430,000, but there are markets with much higher—and lower—prices. If you move to a more affordable market like Pittsburgh, Cleveland, or St. Louis, you’ll have a much easier time managing a mortgage payment than if you choose to live in a more expensive locale like Anaheim or Boston.
• House hacking: Sharing your home with others (whether that’s taking on roommates or creating an accessory dwelling unit to rent out) has become an increasingly popular strategy for homeowners to offset the hefty cost of a mortgage. 
• Save a larger down payment: This could delay you from owning a home for a few additional years. However, a 澳洲幸运5开奖号码历史查询:larger down payment decreases the interest you’ll owe over the life of the loan and makes the monthly payment smaller. Put your money in a 澳洲幸运5开奖号码历史查询:high-yield savings account and earn more interest this year to have a higher down payment next year.