The income required to buy a home has risen in recent years. But what does that mean in real numbers? And where is the most affordable place to buy in the UK?

Understanding Affordability

Affordability remains one of the biggest hurdles for prospective homeowners. While deposits are frequently discussed, the household income needed to secure a mortgage is equally crucial due to the loan-to-income assessment used by lenders.

First-time buyers often have lower deposits than existing homeowners looking to upgrade. Generally, a higher deposit reduces the income needed to buy a home.

Data reveals that first-time buyers typically take a mortgage 3.3 times their household income, while existing homeowners looking to move average a 3 times income-to-loan ratio.

Income Requirements for First-Time Buyers

A first-time buyer aiming to purchase a home priced at £250,000 with a 20% deposit would need an annual household income of £60,600. This figure is up £2,400 from last year.

Upsizing homeowners seeking an average-priced home of £335,000, with a 35% deposit, would need an annual household income of £72,600, reflecting a £3,400 increase from the previous year.

The average UK income is currently £33,300 according to the ONS. This means two average earners buying together have a combined income of £66,600, sufficient for a typical first-time buyer home but challenging for upsizing without a larger deposit.

Regional Variations in Income Requirements

Income requirements for first-time buyers in the Midlands:

Midlands: Prices and required incomes in the Midlands. A first home in the Midlands averages below £200,000, requiring an income under £49,000.

Income Requirements for Upsizing Homeowners

Homeowners looking to move up to a larger home face varying income requirement across regions.

  • Northern England: Household incomes needed range from £31,400 to £78,000.
  • Midlands and Wales: Typically, a household income above £54,000 is needed.
  • Southern England: Incomes needed generally exceed two average UK salaries due to higher house prices. A typical household income needed varies from £52,000 to £58,500.
  • London: The highest income requirement is £124,600 on average.

Why are Required Incomes so High in 2024?

The required income has risen by 4% over the past year due to higher asking prices and a slight decline in loan-to-income ratios.

To cope with this, buyers can either put down larger deposits to reduce the mortgage size or expand their search areas and consider different property types.

Zoopla’s data shows that 2 in 5 buyers in southern England are looking beyond a 10-mile radius to find their next home due to affordability pressures.