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There was definitely a point in time when it did not take a six-figure income to be able to purchase a home and keep up with the costs of ownership. But those days may be gone.

While home prices have come down a bit since peaking earlier this year, they’re still elevated on a national level. That alone is a challenge. But compounding the issue is that mortgage rates have risen sharply since the start of the year. And so buyers these days are looking at twice the borrowing rate — or more — than what they would’ve faced had they signed a mortgage a year ago.

It’s not shocking, then, for Redfin to report that home buyers today must earn an annual salary of $107,281 to be able to afford the typical U.S. home. That salary is based on an average monthly mortgage payment of $2,682.

What is shocking, though, is that a year ago, it only took an annual salary of $73,668 to be able to afford a mortgage on the average U.S. home. And that’s largely due to the fact that mortgage rates have pretty much doubled since that time.

Of course, we all know that the typical U.S. worker does not earn $107,281 a year. So this means that right now, a lot of would-be buyers may have to put their plans on hold until mortgage rates and property values start to drop.

Can you afford to buy a home today?

While Redfin’s data shows that it takes a salary of $107,281 to afford an average home, you may be looking to buy a home that’s less expensive than the typical U.S. property being sold today. That could be because you’re willing to purchase a fixer-upper, or you’re buying in an area where home prices aren’t as inflated. Or, it could be that you’re willing to compromise and start off by purchasing a condo or townhouse rather than a detached home.

Earning less than $107,281 doesn’t automatically mean you should kiss the idea of homeownership goodbye. But what you should do is run the numbers to make sure buying is feasible.

As a general rule, your monthly housing costs should not exceed 30% of your take-home pay. And that list of costs includes:

  • Your mortgage payment
  • Property taxes
  • Homeowners insurance premiums
  • HOA fees, which commonly come into play when you buy a condo or townhouse

If you can stick to that 30% limit on a $60,000 salary, there’s no reason not to buy a home. But do be mindful of it, because going above that threshold could mean struggling to keep up with your housing costs and other bills.

A higher salary isn't a free pass to buy a home

Just as it may be possible to afford a home and earn a lot less than $107,281 a year, so too might it be the case that you earn much more than that but still can’t find a home that allows you to keep your housing costs to 30% of your income or less. If you’re earning $150,000 a year but live and work in an area where the typical home costs $1 million, that might easily be the case.

That’s why it’s so important to run your own numbers before moving forward with a home purchase. In time, we can hope that property values and mortgage rates will start to come down. But until that happens, it’s important to be extra mindful of not taking on too high a mortgage — regardless of what your salary looks like.

This article was written by Maurie Backman from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].