Dave Ramsey's 25% Housing Rule Isn't Feasible in 2026 — These 5 Cities Prove It
Dave Ramsey’s take on housing affordability isn’t exactly a secret, even though many might term it quite conservative: You need to keep your monthly mortgage payment at 25% or less of your take-home pay (or net income), keeping in mind that this also includes the principal, interest, homeowners insurance, any private mortgage insurance you hold, HOA fees and property taxes.
Oh, and don’t forget about putting 20% down to skip the PMI requirement and cut back on interest fees, per Ramsey Solutions.
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But is this advice realistic in some of America’s most expensive metro areas? Even by adopting a slightly easier — and easier to calculate — metric of looking at mortgage principal and interest only, with a rate of 5.82% for a 15-year mortgage based on recent Freddie Mac figures, these five cities remain almost entirely unaffordable for the median household.
A few notes on the below data points: Typical home values were pulled from the Zillow Home Value Index, with figures as recent as May 2026. Median household income stats were pulled from U.S. census data from 2024, and the aforementioned 20% down payment was also assumed to be in place when calculating remaining principal and mortgage interest.
Finally, the median household income data provided by census surveys is accounting for gross income, rather than net income, meaning that the following affordability calculations are even more problematic than they appear.
1. Los Angeles
If you’re little to settle down in the City of Angels, you might want to check your bank balance or pay stub first.
With a typical home value of nearly $1 million (specifically, $968,608), even with a really strong 20% down, you’re still looking at $6,464 mortgage payment over a 15-year term. Compare that with the median household income of $96,405 for the metro region, which translates to a $2,008 maximum 25% monthly payment under Ramsey’s rule, and you’re left with a $4,455 monthly shortfall.
The home price that fits the median income is just over $300,000 — which may be a tough find in L.A.
2. San Diego
Would-be San Diego homeowners face a very similar outlook as above, based on the math.
Typical home value: $946,365
Median household income: $109,132
Monthly mortgage principal and interest payment: $6,315
Ramsey’s 25% maximum monthly payment: $2,274
The gap: $4,042 monthly
3. San Francisco
The third and final California city on this affordability list, San Francisco actually shows the largest gap between what the usual residence might be going for on the market and what the median household income can actually manage.
Typical home value: $1,149,215
Median household income: $135,590
Monthly mortgage principal and interest payment: $7,669
Ramsey’s 25% maximum monthly payment: $2,825
The gap: $4,844 monthly
4. Seattle
One reason why people may end up being sleepless is Seattle is a concern over how they’re going to afford to keep (or buy) their homes, given the disparity between income and mortgage payments.
Typical home value: $750,279
Median household income: $112,388
Monthly mortgage principal and interest payment: $5,007
Ramsey’s 25% maximum monthly payment: $2,341
The gap: $2,665 monthly
5. New York City
The Big Apple has a reputation for being one of the most unaffordable cities in the United States when it comes to keeping a roof over your head, and that line of thinking could have basis in fact.
Typical home value: $727,625
Median household income: $99,852
Monthly mortgage principal and interest payment: $4,856
Ramsey’s 25% maximum monthly payment: $2,080
The gap: $2,775 monthly
Practical but less-than-ideal solutions to the gaps evident in the five examples above include: taking out a longer mortgage, such a 30-year loan; buying a serious fixer-upper rather than something more “typical” or seeking to supplement household income with more work or a better job.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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