How Much Do You Need to Make to Afford a House in Lexington, KY in 2025?

As of early 2025, the median home price in Lexington-Fayette is approximately $329,370, reflecting a steady increase from the previous year. This price growth underscores the city’s competitive housing market, raising the question: How much does a single adult need to earn annually to afford a home in Lexington?

Key Financial Factors

Several factors influence the affordability of a home purchase, including the mortgage rate, down payment, and loan terms.

1. Down Payment – A typical down payment of 20% means the buyer would need to finance 80% of the home’s price.
2. Mortgage Interest Rate – The average 30-year fixed mortgage rate in early 2025 hovers around 6.65%, impacting monthly payments.
3. Loan Term – Most homebuyers opt for a 30-year fixed-rate mortgage.

Monthly Mortgage Payment Estimate

With a 20% down payment and a standard 30-year mortgage at current rates, the estimated monthly mortgage payment (excluding taxes and insurance) is roughly $1,690.

Required Income to Afford a Home

Financial experts typically recommend that housing expenses, including mortgage payments, should not exceed 25% of a person’s gross monthly income. Based on this guideline, a homebuyer would need to earn approximately $81,000 annually to afford a median-priced home in Lexington.

Other Considerations

• Local Price Differences – Home prices vary across Lexington, with some neighborhoods being more expensive than others.
• Additional Expenses – This estimate does not include property taxes, homeowners insurance, private mortgage insurance (for lower down payments), or maintenance costs.
• Interest Rate Fluctuations – Mortgage rates may change, affecting affordability.
• Personal Financial Factors – Credit scores, existing debt, and financial obligations influence mortgage qualification and loan terms.

Conclusion

To comfortably afford a home in Lexington, a single buyer should ideally earn around $81,000 per year, assuming a 20% down payment and a reasonable mortgage rate. Given rising home prices and changing market conditions, prospective buyers should consult a mortgage advisor or financial planner to assess their individual affordability and financing options.