The minimum salary to buy a house in California has skyrocketed to over $106,000 annually — a shocking 80% increase from what was required in January 2020. If you’re feeling overwhelmed by these numbers, you’re not alone. With median home prices hovering around $788,940 and monthly payments reaching about $6,200, the California dream is slipping away for many would-be homeowners.
In fact, the income needed to buy a house in California continues to outpace what most residents actually earn. While a typical U.S. household makes about $81,000 annually, affording a house in California requires much more — particularly in areas like San Francisco, where buyers need to earn over $400,000 for a median-priced home. Now only 17% of Californians can afford to purchase a median-priced home in their county, compared to 56% in 2012.
Throughout this guide, I’ll break down exactly what you need to earn to buy a house in different parts of California, why affordability has become such a challenge, and practical steps you can take if you’re determined to make homeownership a reality in the Golden State.
How much income do you need to buy a house in California?
Buying a home in California demands significantly more income than most residents earn. As of March 2025, you need approximately $234,000 annually to qualify for a mid-tier California home—more than double the median California household income of $96,500. Even for entry-level properties, buyers need about $142,000 in yearly earnings.
The income gap between what’s required and what people actually earn explains why only 15% of California households could afford to purchase the median-priced home of $874,290 in late 2024. Furthermore, according to multiple analyzes, California consistently requires the highest annual salary nationwide to afford a typical home, with estimates ranging from $197,057 to $208,400.
These requirements vary dramatically by location. In Northern California, aspiring homeowners face the steepest financial hurdles. San Jose tops the list, requiring an astonishing $463,887 annual income to afford its median home price of $1.84 million. The Bay Area remains similarly unattainable, with San Francisco, San Mateo, and Santa Clara counties requiring approximately $422,000 in yearly earnings.
Southern California isn’t much more accessible. Los Angeles demands an income of $207,030 for its median home price of $823,000, while Orange County requires nearly $349,200 annually.
For those seeking relatively more affordable options, consider:
- Sacramento: $139,283 income needed (median price: $533,900)
- Riverside/San Bernardino: $146,792 income needed (median price: $579,900)
These income requirements typically assume a 20% down payment and spending no more than 28% of gross income on housing costs. However, with mortgage rates averaging above 7% and home prices steadily climbing, the financial bar continues rising beyond what most Californians can reach.
Where in California can you afford a home?
Despite soaring prices across much of the Golden State, several regions remain relatively accessible for homebuyers with modest incomes. The geographic price disparity in California creates opportunities for those willing to look beyond coastal hotspots.
The most affordable homes in California are predominantly located in the Central Valley and Far North regions. Lassen County stands out with the lowest median sale price of just $226,501 in spring 2025. Other notably affordable counties include Clearlake with median prices around $221,967 and Blythe at approximately $223,355.
For buyers seeking city living at reasonable prices, Bakersfield offers a median home price of $385,000-$399,000, making it 49% less expensive than the California average. Fresno presents similar value with median prices hovering around $359,344-$400,000, alongside Tulare ($340,290) and Stockton ($419,631-$441,009)[81].
Northern California provides several budget-friendly options as well. Eureka, with its Victorian charm and coastal setting, maintains median prices of approximately $392,773-$418,081, whereas Chico offers homes around $420,000-$458,693[73].
Central Valley communities like Visalia ($385,163) and Merced ($390,000) remain consistently below state averages. Even Sacramento, the state capital, presents relative value at $450,000-$479,880[73] compared to coastal regions.
Meanwhile, coastal and major metropolitan areas remain financially out of reach for most Californians. The San Francisco Bay Area posts median prices of nearly $1.3 million, with San Mateo County exceeding $2 million. San Diego County’s median home price stands at $864,000.
Many affordable regions offer strategic benefits beyond housing costs. Bakersfield benefits from its location between Los Angeles and San Francisco, whereas Fresno provides proximity to Yosemite National Park. Additionally, several affordable cities boast strong job prospects in agriculture, manufacturing, healthcare, and government sectors[72].
For those determined to stay in the Golden State without breaking the bank, exploring these more affordable regions might be the key to homeownership in California.
Why is it so hard to afford a house in California now?
Multiple converging factors have created a housing market that’s uniquely challenging in California. The root problem? Monthly payments for a mid-tier home reached nearly $5,900 in March 2024—an extraordinary 82% increase since January 2020. For entry-level homes, payments exceeded $3,500 monthly, representing an 87% increase in just four years.
This dramatic surge stems from a “perfect storm” of economic conditions. Initially, rising home prices drove costs up as buyers needed larger loans. Subsequently, mortgage rates skyrocketed from 2.7% in January 2021 to 7.6% by October 2023, creating a compounding effect on monthly payments.
Essentially, California faces a severe housing shortage. Since 1990, the state has added 3.6 million housing units for 9.4 million new residents. Yet, inflation-adjusted median housing values increased 56% during this period. Currently, California’s housing values remain more than twice the national median.
This shortage has created a stark divide between existing homeowners and potential buyers. Remarkably, 81% of California homeowners enjoy mortgage rates below 5%, versus new buyers facing around 7%. For a typical homeowner with a 5% rate, selling and buying a similarly-priced home at current rates would increase payments by approximately 15%—amounting to over $264,000 more over a 30-year loan.
Consequently, many homeowners choose not to sell, further limiting inventory in an already tight market. Housing permits per capita remain among the lowest nationwide. Concurrently, wage growth has failed to keep pace—while monthly housing payments grew 82-87% since 2020, average hourly wages increased just 24%.
The affordability crisis has driven approximately 800,000 residents to leave California between 2020 and 2023. Unfortunately, even with recent construction increases, California still needs 3.5 million more homes to accommodate its population.
The situation particularly impacts younger Californians, who spend more of their income on housing and are less likely to own homes than previous generations. Ultimately, this creates a market where only the highest earners can afford to purchase homes in many parts of the state.
Conclusion
Looking for alternatives to traditional homebuying can make California homeownership more attainable. First-time homebuyer programs offer valuable assistance through down payment help and reduced interest rates. The California Housing Finance Agency (CalHFA) provides loans with as little as 3.5% down and closing cost assistance up to 3% of the purchase price.
Veterans can utilize VA loans requiring zero down payment, while FHA loans need just 3.5% down for those with credit scores above 580. Furthermore, USDA loans offer 100% financing in eligible rural areas throughout the state.
House hacking—purchasing a multi-unit property, living in one unit, and renting others—has become increasingly popular. This approach allows owners to offset mortgage costs with rental income. Co-buying with family members or friends represents another practical solution, enabling shared costs and potentially accessing more desirable neighborhoods.
Yet successful California homebuying often requires strategic compromises. Consider exploring emerging neighborhoods before they become unaffordable. Cities like Bakersfield, Fresno, and Sacramento offer significantly better value than coastal areas while maintaining decent amenities and job opportunities.
Remote work has created unprecedented flexibility, allowing many to live farther from traditional employment centers while maintaining their income levels. Indeed, numerous Californians now purchase homes in more affordable inland communities while working remotely for coastal employers.
For those determined to stay in pricier regions, consider starter homes or condominiums as entry points into homeownership. Although compact, these properties allow buyers to build equity rather than continuing to rent. Alternatively, some buyers choose to maintain their primary residence elsewhere while purchasing a smaller vacation home in California.
Ultimately, affording a California home in 2025 requires creativity and persistence. By combining alternative financing, strategic location selection, and flexible living arrangements, the dream of California homeownership remains possible—albeit more challenging than in previous generations.
FAQs
Q1. What is the minimum annual income required to purchase a home in California? As of 2025, you typically need an annual income of around $234,000 to qualify for a mid-tier home in California. This amount is more than double the median California household income, making homeownership challenging for many residents.
Q2. Are there any affordable regions to buy a house in California? Yes, there are more affordable options in California. The Central Valley and Far North regions offer relatively lower-priced homes. Cities like Bakersfield, Fresno, and Sacramento provide better value compared to coastal areas while still offering decent amenities and job opportunities.
Q3. Why has housing affordability become such a challenge in California? California faces a severe housing shortage, with demand far outpacing supply. This, combined with rising home prices and increased mortgage rates, has led to a significant surge in monthly housing payments. Additionally, wage growth has not kept pace with the rising cost of housing.
Q4. Are there alternative options for those struggling to afford a home in California? Yes, there are several alternatives. First-time homebuyer programs, house hacking (buying a multi-unit property and renting out units), co-buying with family or friends, and exploring emerging neighborhoods are some strategies that can make homeownership more attainable.
Q5. How does remote work impact housing affordability in California? Remote work has created new opportunities for homebuyers. Many Californians are now able to purchase homes in more affordable inland communities while maintaining their jobs with coastal employers, potentially making homeownership more accessible for some.
Leave a Reply