The Importance of Interest Rates
For example, with a 4% mortgage interest rate, your $2,000 payment could get you a home loan for around $335,000. But if that rate jumps to 6%, the same payment might only stretch to about $270,000.
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.
On a $300,000 mortgage with a 6% annual percentage rate (APR), you'd pay $2,531.57 per month on a 15-year loan and $1,798.65 on a 30-year loan, not including escrow. Escrow costs vary depending on your home's location, insurer, and other details.
The bottom line
Qualified borrowers could see a monthly mortgage payment of principal and interest between $3,043.80 and $4,029.80 for a $600,000 mortgage loan right now.
The principal, interest and property mortgage insurance on $600,000 house with a 15% down payment and a 30-year, fixed-rate mortgage with 7% rate would cost $3,662. To afford this, you would need a monthly income of about $13,079 or an annual income of about $157,000.
So, what does a $500,000 mortgage payment look like if you're trying to budget for your first or next home? The mortgage on a $500,000 house is $2,952 per month toward your mortgage principal and mortgage interest, assuming a 6.86% interest rate and a 30-year fixed term with 10% down.
A $3,500 per month mortgage in the United States, based on our calculations, will put you in an above-average price range in many cities, or let you at least get a foot in the door in high cost of living areas. That price point is $550,000.
If you earn around $50,000 to $60,000 a year or more, you may be in a good position to afford a $150,000 mortgage. But the exact amount you'll be able to borrow — even if you are in that salary range — will likely depend on several other variables as well, including how much debt you have and your credit score.
Monthly Payments for a $250,000 Mortgage
Assuming a 30-year fixed term and an interest rate of 7%, a $250,000 mortgage monthly payment would amount to $1,663 for the loan principal and interest. Choosing a 15-year loan term with a 7% interest rate would translate to a monthly mortgage payment of $2,247.
To afford an $800,000 house, you typically need an annual income between $200,000 to $260,000, depending on your financial situation, down payment, credit score, and current market conditions. However, this is a general range, and your specific circumstances will determine the exact income required.
Here's what a monthly mortgage payment would look like on a $1 million home assuming the same caveats as above: 15-year mortgage at 5.53%: $6,549.41 per month. 30-year mortgage at 6.16%: $4,879.01 per month.
Reduce your loan term
Making the equivalent of two extra mortgage payments per year, for example, will knock off 9 years and 4 months from the total term of your loan. A shorter mortgage term also means that you'll own your house outright sooner.
A $2,500 monthly payment might secure a loan amount close to $400,000 at today's interest rates, assuming a 30-year mortgage and typical property taxes.
The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments.
What income is required for a 200k mortgage? To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of $62,000 annually.
On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.
For a single person, especially one who's not supporting any dependents, $150,000 is a good annual salary. Consider the average salary in the U.S., which is $65,470, according to May 2023 data from the Bureau of Labor Statistics (BLS). A $150,000 annual salary is about 129% higher than the national average.
Can I buy a house with low income? Yes. There is not a specific minimum income to qualify for a mortgage and there are various loan types and programs designed to help eligible buyers cover a down payment or even closing costs.
Mandy Phillips, a mortgage loan originator at Vista Home Loans, ran the numbers with the average property taxes and homeowners' insurance for California to find that buyers with a $2,000 budget could afford a $301,000 purchase price.
With VA loans, your monthly mortgage payment and recurring monthly debt combined should not exceed 41%. So if you make $3,000 a month ($36,000 a year), you can afford a house with monthly payments around $1,230 ($3,000 x 0.41).
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.
To comfortably afford a $500,000 house, you'll likely need an annual income between $125,000 to $160,000, depending on your specific financial situation and the terms of your mortgage. Remember, just because you can qualify for a loan doesn't mean you should stretch your budget to the maximum.
Current mortgage interest rates in California. As of Sunday, January 12, 2025, current interest rates in California are 7.33% for a 30-year fixed mortgage and 6.61% for a 15-year fixed mortgage.
Here's what a $300,000 monthly mortgage payment would be at today's rates, accounting for the conventional 20% down payment ($60,000) and excluding homeowners insurance and taxes: 15-year mortgage at 5.86%: $2,007.15 per month. 30-year mortgage at 6.44%: $1,507.51 per month.