House prices are slightly down across the Bay Area and other California cities, but a recent increase in interest rates is still keeping people out of the housing market.

As of Oct. 10, the fixed 30-year interest rate average was 7.04% according to Bankrate. The Federal Reserve has hiked interest rates several times over the last year in an effort to combat inflation.

That’s sent new California homebuyers’ mortgage payments skyrocketing. “The average payment (depending on the down payment) is $4,500 to $5,000 for principle and interest only,” explained Tim Yee, president of RE/MAX Gold Bay Area. “The shift in interest rates has added over $1,000 to the buyer’s payment on a median-priced home. It is a substantial amount of the average borrower’s current budget and is redefining the Bay Area real estate market.”

To learn more about the real costs of purchasing a home in California and the Bay Area, we dove into the numbers. Of course, any homebuyer’s monthly mortgage payment depends on how much money they put down. The following numbers are based on buyers with credit scores above 700 and a solid financial history.

How much do you need to earn to afford a home in the Bay?

It turns out, quite a bit.

The median home in the Bay Area costs $1.3 million.

If a buyer chooses to put down the standard 20% when purchasing a $1.3 million home, the total amount of principal, interest, taxes and insurance would be approximately $7,272 per month.

Buyers who purchase with less than 20% down are required to pay for private mortgage insurance, as well. So if a buyer manages to thread the needle and purchase a $1.3 million home with only 10% down, monthly payments including principal, interest, taxes and insurance would be $8,633.

According to Rent.com, housing costs should not exceed 30% of your income. To keep the payment on a median-priced home here in the Bay Area below 30% of your income, after putting down 20%, a person would need to earn approximately $24,240 per month or $290,880 per year.

Using an FHA loan

If a person hopes to purchase a home in California using the Federal Housing Administration (FHA) process, there are some limitations. FHA is a federal home loan program that insures the loans of first-time homebuyers and allows them to put down as little as 3.5% when buying a home.

However, according to Yee, the max loan amount for FHA in the Bay Area is $970,800, so an FHA buyer would need to cover the 3.5% and the balance in cash to purchase. (You can look up FHA limits in your county here.)

This means that someone looking to buy a median-priced home using an FHA loan would need to have a down payment of around $33,978 as well as the remaining $329,200 that would not be covered by FHA when purchasing a $1.3 million home.

How much do you need to earn to afford a California home?

If you’re looking for a home within the state of California, the numbers are a bit lower than in the Bay Area, but not by much.

According to Redfin, the median price for a home in California is $761,700. The FHA limit for the state of California sits far lower than the Bay Area at $420,680.

In order to purchase a median-priced California home through FHA, a buyer would need to provide a down payment of $26,659 as well as an additional $341,020 in cash.

If a buyer puts down the standard 20%, their monthly payment will be $5,008 including principal, interest, taxes and insurance. If a buyer only puts down 10%, they’ll see their mortgage payment sit around to $5,945.

To keep a house payment below 30% of your income after putting 20% down, a person would need to earn roughly $16,693 per month or $200,316 per year – just to buy a median-priced home in California.