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Key Takeaways
- Homeownership rates rise sharply with income—upper-income households are far more likely to own homes than lower-income households.
- Other factors influencing ownership include inheritance, age, location, and relationship status.
Owning a home isn’t just about having a place to live. For many Americans, it represents stability, financial security, and long-term wealth building, with home equity often serving as a household’s most valuable asset.
But homeownership isn’t equally accessible to all. Which income bracket your household falls into may be associated with whether you’ve purchased your own home. In this article, we take a look at the numbers.
Homeownership Rates Climb With Each Income Tier
Income tiers are commonly measured relative to the national median household income, which is $83,730 per year. A low-income household earns up to two-thirds of the median household income, and a middle-income household earns between two-thirds of the median household income to double the median household income. A high-income household earns more than double the median household income.
Here’s what those tiers look like:
- Lower-income households earn less than $55,819 per year.
- Middle-income households earn between $55,820 per year to $167,459 per year.
- Upper-income households earn more than $167,460 per year.
Another way to look at this is to divide household incomes into quintiles (equal 20% segments). We can also break out the top 10% separately. Based on the latest available data, the distribution looks like this:
| Group | Label | Median Income | Mean Income | ~Households |
| 1 | Bottom 20% | $20,537 | $19,126 | 26.3M |
| 2 | 20th–40th | $43,236 | $42,870 | 26.2M |
| 3 | 40th–60th | $70,259 | $71,218 | 26.3M |
| 4 | 60th–80th | $115,658 | $116,922 | 26.3M |
| 5 | 80th–90th | $189,160 | $192,804 | 13.1M |
| 6 | Top 10% | $390,209 | $720,535 | 13.1M |
Over the years, various studies have shown that homeownership rises with income. One of the most authoritative sources on this is the Federal Reserve. Here’s its latest findings:
The data shows a clear pattern: the higher the income, the more likely a household is to own a home.
Why Income Affects Homeownership So Strongly
The income gap for homeownership reflects a set of structural financial barriers. Notable ones include:
Upfront Costs
Homebuyers typically put down between 3% to 20% of the purchase price. With the median U.S. home value at $405,300, that translates to roughly $12,000 to $81,000.
On top of that, there are closing costs, which typically range from 2% to 5% of the purchase price; various other fees; and, in some cases, requirements from lenders to still have savings left after this massive outlay.
Accumulating that level of savings is difficult for many households.
Mortgage Qualification
Lenders evaluate debt-to-income ratios, credit history, and income stability. Higher incomes make it easier to meet these underwriting standards and absorb ongoing ownership costs.
Other Factors That Influence Ownership Rates
While income is arguably the strongest predictor of homeownership, other forces also play roles. They include:
- Age: Ownership rises significantly with age, as households have more time to save and build credit.
- Inheritance and intergenerational wealth. Family transfers, including inherited property or financial assistance with down payments, can significantly increase the likelihood of homeownership.
- Race and ethnicity: The Federal Reserve and Census Bureau document substantial differences in ownership rates across racial and ethnic groups.
- Location: High-cost metropolitan areas require higher incomes to achieve the same ownership probability as lower-cost regions.
- Education and relationship status: Higher education and dual incomes are associated with higher homeownership rates.
Important
Many factors are closely intertwined with income. For instance, higher educational attainment often leads to better-paying jobs; couples typically benefit from two income streams; earnings generally rise with age and work experience; and longstanding structural inequalities affect pay.
The Bottom Line
Income is a strong determinant of homeownership. Households in the upper-income tier are statistically more likely to own than rent, while middle- and lower-income households often face greater hurdles getting on the housing ladder without outside assistance or trade-offs.
