Mar 11, 2025
If you're wondering if homeownership will ever be attainable for you, you're not alone. In 2024, 70% of Americans believed that buying a home was unrealistic, according to IPX1031.
Of course, many renters would prefer to be homeowners. A 2024 CNN poll found that 86% of people who were renting wanted to buy a home but weren't going that route because they couldn't afford it. So even if you live in a city where home prices are moderate, buying a place of your own may not be doable on a modest income.
Advertisement
If you’re 40 years old with a $50,000 salary, you may be able to swing a rental in the Twin Cities. Apartments.com puts the average rent in Minneapolis at $1,363 for a one-bedroom. However, the average cost of a studio is $1,095.
With a $50,000 annual salary, you should ideally be keeping your housing costs to $15,000 a year, or $1,250 a month, or less, so that rent isn’t eating up more than 30% of your pay. But if you have a studio or a cheaper one-bedroom apartment, you may be below that threshold.
Buying a home, on the other hand, can prove trickier. Zillow puts the average Minneapolis home value at $312,602, marking a 2% increase from a year prior.
Even with a 20% down payment and a 30-year mortgage at 6.76% (the average rate for that loan type today), you’re looking at a monthly payment of about $1,624 for just principal and interest. So right there, you’re already exceeding 30% of your salary without accounting for property taxes and homeowners insurance.
That doesn’t mean buying a home is out of the question, though.
How to swing homeownership in today's market
Given that home prices are elevated on a national scale and mortgage rates are far from cheap, you may find it difficult to afford a home on a modest salary. But there may be ways to swing one.
First, you could consider buying a home and renting a portion of it out. This works especially well if your home features a separate entrance, finished basement or garage for privacy. You could also look at buying a duplex, which has two separate units under one roof.
Advertisement
You can also partner with a real estate agent who knows your local market well and try to find neighborhoods that are less expensive. In fact, moving into an up-and-coming neighborhood could allow for big savings on a home purchase. And while you may be giving up certain amenities in the near term, once that neighborhood is developed, you could gain access to many perks — not to mention see your home value soar.
You can also see if there are any first-time home buyer programs in your area. Minnesota has a Start Up program for first-time buyers with income limits of up to $142,800 based on county. With a $50,000 income, you may qualify for down payment and closing cost assistance, so it pays to learn more.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Make sure you don't get in over your head
Even if you're technically able to buy a home, you don't want to end up in a situation where you're stretched too thin. As mentioned earlier, it's best to keep your housing costs to 30% of your income or less. It could pay to wait until you've saved up a larger down payment to move forward with a home purchase.
You should also make sure to have a solid emergency fund before making a home purchase — ideally, one with enough money to cover at least three months of essential bills. Once you become a homeowner, your ability to save might dwindle. So it's important to go in with a nice cushion.
Meanwhile, once you buy your home, make sure to put yourself on a budget so you're able to keep up with your expenses. You also want to make sure you're still able to save some amount of money on a regular basis, since your retirement probably isn't going to fund itself.
And speaking of retirement, make sure that buying a home doesn't mess up your long-term financial goals. If you take on a house that eats up a lot of your paycheck, it might limit your ability to save for retirement.
Granted, at age 40, you have many more working years ahead of you. But you also don't want to neglect your retirement nest egg for the next decade and a bit due to buying a home. Make sure you'll be able to strike that balance before moving forward.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
