What annual salary do you need to afford a million-dollar house? To comfortably afford a home valued at $1 million, financial experts recommend an annual salary between $269,000 and $366,000.
Lenders often have stricter requirements because these loans do not have backing from these two entities. To qualify for a million-dollar home, you need to show a high income and make a big down payment. You'll also need to be a low-risk borrower with a stellar credit score.
Monthly payments on a $1,000,000 mortgage by interest rate
At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $6,653 a month, while a 15-year might cost $8,988 a month.
Down payment on a $1 million home
Most jumbo mortgages require a 20–30% down payment. For a million-dollar home, that translates to $200,000–300,000. Note that criteria will vary by lender. You may be able to secure a jumbo mortgage with a smaller down payment, depending on your overall financial situation.
A Comprehensive Guide. To afford a $1 million home with a 6% interest rate, you typically need an annual salary of $250,000 to $275,000, assuming a 20% down payment ($200,000), a 30-year fixed mortgage, property taxes at 1.25% of the home's value, $5,000 annual homeowners insurance, and a debt-to-income ratio of 36%.
On a $70,000 salary using a 50% DTI, you could potentially afford a house worth between $200,000 to $250,000, depending on your specific financial situation.
A mortgage is generally considered a Jumbo Loan when it exceeds the conforming loan limit, $726,200 in most U.S counties, set by Fannie Mae and Freddie Mac. Super Jumbo Loans usually include mortgage amounts over $1 million.
However, you will need to budget well and have a lot of money saved up for the down payment. A large enough down payment can significantly reduce the ongoing costs and make a $300,000 salary enough for a 1.5 million-dollar home.
To start, here's what an $800,000 mortgage would cost at today's average rates, assuming the conventional 20% down payment ($160,000) for principal and interest only: 15-year mortgage at 5.78%: $5,324.91 per month. 30-year mortgage at 6.41%: $4,007.43 per month.
Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear. Statewide, there has been a dramatic rise in the number of Californians who have paid off their mortgages, from 1.6 million households in 2000 to 2.4 million in 2020.
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.
$1,000,000 business loans can be obtained from banks, credit unions, SBA-backed institutions, lending marketplaces and some online lenders, however securing loans of this size can be more challenging than getting a quick business loan for a few thousand dollars.
You'll likely need an annual salary of at least $250,000 to finance a $1 million dollar home with a 30-year mortgage, assuming a 20% down payment and low escrow costs. The income required to purchase a million-dollar home varies based on your location, loan amount, mortgage rate and other affordability considerations.
A loan is considered jumbo if it exceeds the maximum loan limits for Fannie Mae and Freddie Mac conforming loans—currently $766,550 for single-family homes in most parts of the U.S. but up to $1,149,825 in certain more expensive areas.
How much is $1,000,000 mortgage a month? You can expect to spend around $6,653 a month with a 30-year mortgage term and $8,988 a month with a 15-year term. This assumes you have a 7% interest rate (and doesn't take into account property taxes, mortgage insurance, and property insurance).
With a $160,000 annual salary, you could potentially afford a house priced between $480,000 to $950,000, depending on your financial situation, credit score, and current market conditions. For homes priced above $766,550 (the 2024 conforming loan limit), you'll likely need to consider a jumbo loan.
Depending on your goals and plans for retirement, $1.5 million may be enough to sustain you in retirement. It would allow you to withdraw $60,000 per year for 25 years.
Lower credit borrower: $366,300 income needed
As a rule of thumb, a million-dollar purchase price will require a jumbo loan. To get a jumbo loan, you typically need a credit score of 700 or higher. But let's say a borrower has a credit score on the lower end of the approvable range.
The closest is California, with a June 2024 average mortgage balance of $443,000. California also leads the pack in terms of the percentage of mortgages that have a balance of $1 million or more, with 7.4% of the state's mortgages averaging $1 million-plus. Notably, Washington, D.C., has an average balance of $506,600.
As a single person, earning $70,000 annually might be completely comfortable if you live a modest-to-spendy lifestyle in a city with a low cost of living. Living in a high cost-of-living city, like Los Angeles or New York, might also be possible when you split housing costs with a roommate or relative.
If you make $70,000 a year, your hourly salary would be $33.65.