As mortgage rates have hit their lowest level in over three years, expectations of reaching a more affordable market in 2026 have grown dramatically.
On this optimistic track, a new Zillow analysis states that mortgage payments should be affordable by year’s end for several major markets, the most since 2022.
In the case of the analysis, affordability means a mortgage payment on a typical house (with a 20% down payment) that doesn’t require more than 30% of the median household income (commonly known as the 30% rule).
Pre-pandemic, mortgage payments were usually in the range of 22.5% to 26.5% of median household income. In contrast, at the all-time-low seen in October 2023, a typical mortgage required 38.2% of median household income. Looking at the present, a mortgage payment is commonly 32.6% of median household income, which is the best affordability seen nationwide since August 2022. The portal stated this is on track to improve to 31.8% by the end of 2026.
“This is what a small-wins year looks like for housing,” said Zillow Senior Economist Kara Ng. “Rising incomes, subdued price growth and gradually easing mortgage rates would help buyers regain their footing while allowing homeowners to continue building wealth. These types of slow and steady affordability improvements are exactly what the housing market needs over the long-run.”
The report outlines 24 major markets where the share of income spent on mortgage payments will hover near or shift under the 30% threshold in 2026, making them more affordable:
| Chicago, Illinois: from 30.4% to 29.7% | Detroit, Michigan: from 26.1% to 25.5% | Pittsburgh, Pennsylvania: from 22.3% to 21.4% | Oklahoma City, Oklahoma: from 26.9% to 26.3% |
| Dallas, Texas : from 31.3% to 30.1% | Minneapolis, Minnesota: from 30% to 28.7% | Cincinnati, Ohio: from 28.6% to 28.1% | Raleigh, North Carolina: from 30.4% to 29.6% |
| Houston, Texas: from 29.8% to 28.8% | Baltimore, Maryland: from 29.3% to 28.2% | Kansas City, Missouri: from 29.4% to 28.9% | Memphis, Tennessee: from 27.7% to 26.9% |
| Washington, D.C.: from 32.8% to 31.5% | St. Louis, Missouri: from 25.9% to 25.2% | Columbus, Ohio: from 30% to 29.5% | Louisville, Kentucky: from 27.2% to 26.4% |
| Philadelphia, Pennsylvania: from 31.9% to 31.3% | Charlotte, North Carolina: from 31.4% to 30.9% | Indianapolis, Indiana: from 27% to 26.6% | Buffalo, New York: from 26.6% to 26.3% |
| Atlanta, Georgia: from 30.6% to 29.9% | San Antonio, Texas: from 28.9% to 27.7% | Cleveland, Ohio: from 28.1% to 27.7% | Birmingham, Alabama: from 24.2% to 23.3% |
Notably, the only major metro where affordability is expected to worsen in 2026 is Hartford, which was also named Zillow’s hottest market for 2026.
Zillow predicts that mortgage rates will continue to decrease to near 6% and will end the year there, although further declines could happen. Home values are also predicted by the portal to increase by 1.9% to a typical home value of $365,795, which is higher than 2025 but “rather subdued compared to long-term norms.”
“Preparation doesn’t just make the process smoother—it can change the outcome,” added Ng. “Knowing your numbers ahead of time helps buyers compete without overreaching. And for many first-time buyers, exploring down payment assistance programs on the Zillow listing is a low-effort way to clear a financial hurdle.”
