Starter Properties Value $1 Million and Up in These US Cities. Here is How A lot You Should Earn to Afford One

The variety of U.S. metro areas the place starter houses price at the least $1 million has practically tripled since 2020, from 85 to 233. Zillow’s March 2025 research on the housing market revealed this gorgeous soar in the price of entry-level houses. Whereas the common nationwide worth for a starter house is $192,514, the rising variety of $1 million+ starter houses is a lingering results of pandemic-era worth progress.

For its functions, Zillow outlined starter homes as houses amongst these within the lowest third of house values in a given area.

How A lot Ought to You Spend on a Starter House?

Monetary specialists have lengthy really useful following the 30% rule on the subject of figuring out how a lot to pay for housing. This rule of thumb was established by the federal authorities, and it suggests it’s best to spend not more than 30% of your gross revenue on housing prices.

Understand that housing prices with a mortgage embody:

• Mortgage principal
• Curiosity
• Property taxes
• Householders insurance coverage

The advice was created to make sure householders might afford different dwelling bills like meals, transportation, utilities, healthcare, and different prices related to operating a family. If greater than 30% of your revenue goes towards placing a roof over your head, you could end up strapped to pay for different vital requirements.

How A lot Ought to You Earn to Purchase a $1 Million House?

If you buy a $1 million house at an rate of interest of 6.75% and put 20% down, your month-to-month funds can be:

Your whole month-to-month fee can be $6,314.11. So, in accordance with the rule, this should not be greater than 30% of your gross revenue. You would wish a month-to-month revenue of $21,047.03 (or an annual revenue of $252,564.40) to comfortably afford a $1 million house.

The House Affordability Hole

You might have noticed an issue with the 30% rule: Housing prices proceed to rise whereas actual wages aren’t maintaining. This makes it more durable for householders (even these with greater incomes or one of the best intentions) to comply with the rule.

Householders are more and more stretched, spending over 30% of their revenue on housing. In Could 2025, the housing cost-to-income ratio was 34.75%, primarily based on Investopedia’s housing affordability information. This leaves households with much less revenue for necessities or monetary targets like school or retirement.

Investopedia tracks house costs, mortgage charges, revenue, and extra to generate a housing cost-to-income ratio. The info exhibits a major hole between median month-to-month incomes and the revenue required to comply with the 30% rule:

The Backside Line

Householders, particularly these in search of starter houses, face an affordability problem. The pandemic-era improve in housing costs, coupled with greater mortgage charges, makes it arduous for wages to maintain up. This pushes householders to spend extra on housing on the expense of different requirements or monetary targets.

If you happen to’re a first-time homebuyer, it is vital to analysis housing prices and mortgage charges to make sure you get one of the best deal. Requesting mortgage quotes from a number of lenders might find yourself saving you a substantial quantity in your mortgage funds.