Homes are on track to become affordable in 20 of the nation’s 50 largest metropolitan areas by the end of 2026 — the most since 2022 — driven by slower price growth, falling mortgage rates and rising incomes, according to a new forecast from Zillow.

The projection assumes buyers put 20% down on a home purchase, a key caveat that Zillow notes remains a major hurdle for many households.

Under Zillow’s definition, a home is considered affordable when the monthly mortgage payment — including principal, interest, taxes, insurance and maintenance — does not exceed 30% of median household income.

Zillow projects that threshold will be met in 20 major metros by December, with Chicago, Atlanta and Raleigh joining the list.

Affordability is expected to improve in nearly every major market this year, with the lone exception of Hartford, Conn., which Zillow recently forecast as the nation’s hottest housing market for 2026.

At the national level, the typical mortgage payment now consumes about 32.6% of median household income, the best affordability reading since August 2022. Zillow expects that figure to fall to 31.8% by year’s end.

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The outlook hinges on several assumptions: mortgage rates easing to around 6%, home values rising a modest 1.9% this year, and incomes increasing by about 3.3%, based on Bloomberg consensus estimates.

Zillow emphasized that the forecast assumes a 20% down payment, which significantly affects monthly costs.

The typical U.S. home is currently valued at $359,078, according to the Zillow Home Value Index, putting a 20% down payment at nearly $71,800.

That figure could exceed $73,000 by the end of the year if prices rise as projected. Buyers who put less down would face higher monthly payments and reduced affordability.

Using December’s average mortgage rate of 6.2% and assuming a 20% down payment, Zillow estimates the monthly cost for a typical home at $2,337 — down $92 from a year ago and $177 below the peak reached in October 2023. If Zillow’s forecast holds, that payment would edge up slightly to $2,358 by year’s end.

“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.”

Affordability deteriorated sharply after home prices surged beginning in 2020 and mortgage rates doubled in 2022.

Conditions hit a low point in October 2023, when a typical mortgage required more than 38% of median household income and only seven of the nation’s largest metros were considered affordable.

Zillow said the projected improvement is notable because it does not rely on falling home prices. Home values are expected to rise in 41 of the 50 largest metros this year, underscoring how much the outlook depends on income growth, easing rates — and buyers’ ability to make a substantial down payment.

Zillow's complete list of the 20 metropolitan areas where homes are on track to become affordable by the end of 2026 can be viewed here.