The 30% rule — one in which potential homebuyers limit their mortgage payment to 30% of their monthly income — is a common standard that homebuyers typically follow so that the yearly cost of a home doesn’t put too much of a strain on their finances.
However, according to a new report from Realtor.com, places where homebuyers can follow that recommendation when buying a home are becoming fewer and farther between in the country’s major metropolitan areas.
Affordability in just three of America’s 50 top metro areas is such that households that make the median income can scoop up a home that won’t go above 30% of their yearly earnings, the report found.
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Realtor.com said it determined the three major metro areas where the 30% rule remains feasible by “using a standard 20% down payment and May’s average mortgage rate of 6.82%.” It also factored in tax and insurance.
Those metro areas were Pittsburgh, Pennsylvania; Detroit-Warren-Dearborn, Michigan; and St. Louis, Missouri, the real estate marketplace said.
Median yearly household incomes in those cities were $72,935, $72,493 and $79,869, respectively, according to the report.
In Pittsburgh, the proportion of a household’s median annual income required to be capable of footing a $249,900 home in the area was 27.4%. The report pegged the amount that a household would need to pay for the mortgage, tax and insurance per year at $19,970.
Detroit-Warren-Dearborn, meanwhile, utilized 29.8% of a household’s annual income for a home asking the median of $270,000 in May, according to Realtor.com. The yearly mortgage payment, tax and insurance would amount to $21,576.
Households in the St. Louis area are capable of covering a median home’s associated payments with 30% of their yearly income, the real estate marketplace reported.
Realtor.com Chief Economist Danielle Hale said in a statement that while “a few” Midwestern markets “still offer a path to homeownership for the median-income household who can make a 20% down payment,” it “remains out of financial reach without significant changes to either housing supply or interest rates” in most large markets.
“Earnings have risen, but homebuying costs have risen faster, which means that adhering to affordability guidelines can feel challenging if not impossible in many housing markets across the country,” she said.
Nationwide, Realtor.com found roughly 44.6% of income would be necessary for a household to be capable of financially handling a “median-priced” home.
Some metro areas saw much higher percentages of the median income necessary to pay for a median home, such as Los Angeles-Long Beach-Anaheim, where it was 104%, and New York-Newark-Jersey City, where it came in at 66.9%, according to the report. In the Boston-Cambridge-Newton area, it was 64.3% of a household’s median income.
One thing that Realtor.com said could help with affordability was adding more homes priced at affordable levels.
A separate report released by the National Association of Realtors and Realtor.com last month found that 30% of America’s 100 largest metro areas were “areas getting close to balance” for affordable home supply across income levels, while 44% were “areas stuck in the middle” with “misaligned but not at crisis level” housing supply and demand. Over a quarter (26%) had markets where that “gap in affordable listings” has continued to worsen and get further from balance.
HOUSING GETTING MORE AFFORDABLE FOR MIDDLE-INCOME EARNERS BUT SUPPLY ISSUES REMAIN
Many U.S. adults — 75% — still consider homeownership to be a component of the American dream, per a January Realtor.com survey.
The U.S. homeownership rate hovered at 65.1% in the first quarter of 2025, according to the Federal Reserve Bank of St. Louis.
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