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The Income Needed To Qualify for A $500k Mortgage

A good rule of thumb is that the maximum cost of your house should be no more than 2.5 to 3 times your total annual income. This means that if you wanted to purchase a $500K home or qualify for a $500K mortgage, your minimum salary should fall A 500k house might seem expensive, but it's not in today's market. **You can afford a house of 500k by earning anything from $74,607 before tax**. However, you must consider several factors such as the downpayment, loan terms and interest rates, debt obligations, and closing costs based on location.

For FHA loans, a down payment of 3.5% is required for maximum financing. So for the same $500,000 home, you would need to come up with at least $17,500. Including the closing costs, you should be putting aside approximately **between $27,500 and $28,750** to get the keys to your first home.

- Purchase a home you can afford.
- Understand and utilize mortgage points.
- Crunch the numbers.
- Pay down your other debts.
- Pay extra.
- Make biweekly payments.
- Be frugal.
- Hit the principal early.

By the time you are 35, you should have **at least 4X your annual expenses** saved up. Alternatively, you should have at least 4X your annual expenses as your net worth. In other words, if you spend $60,000 a year to live at age 35, you should have at least $240,000 in savings or have at least a $240,000 net worth.

Home Costs, Worth and Mortgage Are Substantial Indicators

In other words, **if you're worth $500,000 and your home constitutes $450,000 of that, you're middle class**.”

When attempting to determine how much mortgage you can afford, a general guideline is to multiply your income by at least 2.5 or 3 to get an idea of the maximum housing price you can afford. If you earn approximately $100,000, the maximum price you would be able to afford would be **roughly $300,000**.

You can afford a **$450,000 house**.

On a $70,000 income, you'll likely be able to afford a home that costs **$280,000–380,000**. The exact amount will depend on how much debt you have and where you live — as well as the type of home loan you get.

I make $90,000 a year. How much house can I afford? You can afford a **$270,000 house**.

According to Brown, you should spend **between 28% to 36% of your take-home income** on your housing payment. If you make $70,000 a year, your monthly take-home pay, including tax deductions, will be approximately $4,530.

How much house can I afford on a 120k salary? Keeping the 28/36 rule in mind, a prospective homeowner with a $120,000 income may be able to afford a **$1 million home on a 30-year fixed mortgage**. That is to say, they could spend up to $33,600 per year on a mortgage.

Safe debt guidelines

So start by doing the math. If you make $50,000 a year, your total yearly housing costs should ideally be no more than $14,000, or $1,167 a month. If you make $120,000 a year, you can go up to **$33,600 a year**, or $2,800 a month—as long as your other debts don't push you beyond the 36 percent mark.

For the couple making $80,000 per year, **the Rule of 28 limits their monthly mortgage payments to $1,866**. Ideally, you have a down payment of at least 10%, and up to 20%, of your future home's purchase price. Add that amount to your maximum mortgage amount, and you have a good idea of the most you can spend on a home.

In 2021, the median household income is roughly $68,000. An upper class income is usually considered at least 50% higher than the median household income. Therefore, an upper class income in America is **$100,000 and higher**.

A $400,000 a year household income puts you in America's top 1.8% income-earners according to the IRS. Therefore, **by most metrics, you are considered rich**.

**75k salary is a good hourly wage when you think about it**. When you get a job and you are making about $16 an hour, making over $75,000 a year seems like it would provide amazing opportunities for you. Right? The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source).

If you're making $115,000 you are **above the average American**. Depending on your financial goals, you may or may not consider adding additional streams of income.

Therefore, if you want to buy a $2 million house, you need to make **at least $667,000 a year**. You should also have enough for a 20% down payment, or $400,000, plus a $100,000 cash buffer in case you lose your job. In this low interest rate environment, you can stretch to buy a home up to 5X your annual gross income.

For homes in the $800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in **$119,371 before tax**, assuming a 30-year loan with a 3.25% interest rate.

The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a **$120,000 to $150,000** mortgage at $60,000.

Assuming the best-case scenario — you have no debt, a good credit score, $90,000 to put down and you're able to secure a low 3.12% interest rate — your monthly payment for a $450,000 home would be $1,903. That means your annual salary would need to be **$70,000 before taxes**.

**You need to make $240,520 a year to afford a 650k mortgage**. We base the income you need on a 650k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $20,043. The monthly payment on a 650k mortgage is $4,810.

What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your **monthly income should be at least $8200** and your monthly payments on existing debt should not exceed $981. (This is an estimated example.)

You need to make **$203,517 a year** to afford a 550k mortgage. We base the income you need on a 550k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $16,960. The monthly payment on a 550k mortgage is $4,070.