What Salary Do You Need to Buy a Starter Home in Illinois? (2024 Data)

To afford a typical starter home in Illinois, you need an annual salary of at least $38,369. This calculation is based on a median starter home price of $160,200 and follows the standard budgeting rule that your monthly mortgage payment should not exceed 30% of your gross income. While challenges like limited new construction exist, Illinois remains one of the more accessible markets in the Midwest for first-time buyers, especially in key cities.

How Is Home Affordability Calculated in Illinois?

The primary benchmark for affordability is that your principal, interest, taxes, and insurance (PITI) payment should be at or below 30% of your gross monthly income. For a home priced at $160,200, with a assumed down payment and current mortgage rates, the target salary is $38,369. This income level is significantly lower than in neighboring states like Wisconsin ($61,475) and Indiana ($45,595). This calculation provides a clear starting point for budget planning.

Which Illinois Cities Are Most Affordable for First-Time Buyers?

Based on market analysis, three cities stand out for their combination of affordability and quality of life:

• Peoria: Offers a strong balance of low entry-level home prices and stable community amenities.
• Springfield: As the state capital, it provides a robust job market and historically affordable housing options.
• Champaign: Home to the University of Illinois, this city features a dynamic economy and inventory suitable for first-time buyers.

These markets present opportunities where your target salary stretches further compared to more expensive areas like Chicago suburbs.

What Are the Challenges in the Illinois Housing Market?

Despite favorable salary requirements, prospective buyers should be aware of market dynamics. Illinois received a "C" grade on a recent homeownership affordability report card, largely due to sluggish new construction. While the state contains 3.7% of the U.S. population, it accounted for only 1.3% of national homebuilding permits. This potential supply constraint could lead to continued price appreciation, making timely action in well-priced markets a consideration.

What Resources Are Available for Illinois First-Time Homebuyers?

Illinois offers several programs to help bridge the affordability gap. Down payment assistance programs can reduce the initial cash required to purchase a home. There are also specific mortgage loans for first-time homebuyers that may feature favorable terms. Given that the state's median household income ($79,180) is well above the threshold needed for a starter home, many residents are potential candidates; the key is understanding qualification criteria.

For those considering a purchase, focusing on markets with strong affordability metrics like Peoria and Springfield may be advantageous. Exploring down payment assistance programs can significantly lower the financial barrier to entry. Based on our experience assessment, acting while supply and interest rates are predictable could be beneficial for long-term equity growth.