salary to afford 700k house

How Much You Need To Make Annually To Afford A $700k House

You’re looking at properties. And the costs are rising.

It’s become obvious that you may need to pay $700,000 or more to get your dream home.

But can you actually afford it?

It depends. Below, we’re going to take a deeper look at the salary required to purchase a $700,000 house.

Salary to Afford 700K House

Before we get too deeply into this, understand that there’s a lot at play here. Someone who makes $200,000 but has $50,000 in credit card debt is in an entirely different financial situation than someone who makes $150,000 and has $0 debt.

When we talk about affordability, we generally are talking about monthly payments. And that involves debt-to-income ratios. Your debt-to-income is based on your income and things like personal loans, credit card debt, and student loans. Most lenders will not go over a debt-to-income ratio of around 43%.

And there are other costs, too. Property tax, closing costs, and homeowners insurance. These will all impact overall mortgage affordability.

salary to afford 700k house

The Nuts-and-Bolts of a 700k Mortgage

If you’re looking to purchase a $700,000 house, you’ll need to make an annual salary of at least $140,000. This is assuming that you have no other debt payments and you’re able to put down a 20% down payment. Your monthly mortgage payment would be approximately $3,006 right now (with a 5% interest rate). With taxes and fees, it would be close to $4,000.

To be more comfortable, you should really make at least $200,000 to purchase a $700,000 house.

If you don’t have a 20% down payment, you’ll likely need to pay for private mortgage insurance (PMI). This will increase your monthly mortgage payment and the overall cost of your loan. For example, if you put down a 5% down payment on a $700,000 house, your monthly mortgage payment would be approximately $3,570. With taxes and fees, it might be over $4,600.

Assuming you’re able to make the monthly payments, a $700,000 house should be within your budget. However, it’s important to take into consideration the other costs of homeownership, such as maintenance, repairs, and property taxes. These costs can add up quickly and may impact your ability to afford a $700,000 house.

Note that mortgage rates are also very variable right now. You can get a pre-qualification with a lender to check your personal mortgage rate.

salary to afford 700k house

A $700K House on a $200,000 Salary

Let’s say you make $200,000 a year or $16,666 in monthly income. To be in an acceptable DTI, you would need your debt payments to be no more than $7,166 a month. So, if you didn’t have any other debts, you’d be able to make the payments easily.

But add $1,000 in credit card debt and $3,000 in student loans, and suddenly you can’t afford a $700,000 house even on a salary that’s well above $140,000.

When it comes to affording a house, your monthly debt payments are actually one of the most critical factors. While you probably can’t increase your income suddenly, you can decrease your monthly debt expenditures over time.

Still not sure? You can look for a mortgage affordability calculator online to see how things like salary, credit cards, mortgage default insurance, gross monthly income, and other factors can impact your home loan.

The Down Payment for a $700,000 House

One of the biggest hurdles in purchasing a $700,000 house is coming up with a down payment. If you’re able to put down 20%, that’s great. But most people don’t have that much money saved.

The average American has a savings account balance of around $3,000. So, if you’re looking to purchase a $700,000 house, you’re going to need to save for quite some time or put in a lower down payment.

The complication here is that a lower down payment is going to cause you to have to pay private mortgage insurance. PMI is an additional cost on top of your regular mortgage loan that will count toward affordability.

If you put down 10% on a $700,000 house, you would be paying roughly $289 in just PMI alone. Your total monthly payment would be around $4,600 at a 5% interest rate. And an FHA loan will have PMI for the life of the loan.

Next, about interest rates…

How Interest Rates Impact Your Loan

At 3% (just a year ago), a $700,000 house with a 20% down payment would have cost $3,294 a month. Now at 5%, it’s closer to $4,000. That’s a tremendous jump. If the interest rates rise to 7%, you’re looking at a monthly payment of $4,650.

Here, you can see how affordability is so variable. Interest rates, debt rates, all these things factor in. The easiest way to determine how much you can actually afford is to talk to a lender. Usually, they will tell you exactly what you need to do to make a house affordable, whether it’s increasing your income, paying off your debt, or trying to put down more money.

And that is always an option. If you can only afford a $600,000 house but you can put down an additional $100,000, then you can afford a $700,000 home.

salary to afford 700k house

How to Buy a House You Can’t Afford

If you really want to buy a house that’s out of your budget, there are a few things you can do.

  • You can try to get a roommate to help with the mortgage payments or rent out part of the house. But be aware that the mortgage lender cannot consider this in their lending structure.
  • You can try to negotiate with the seller. If the house has been on the market for a while, they may be more willing to come down on the price.
  • You can put more money down. The more money you put down, the less you’re effectively borrowing. Banks care more about how much you’re borrowing than the value of the property (unless the value of the property is less than you’re borrowing).
  • You can get rid of PMI. At a minimum, you will want to put 20% down. Putting 20% down will remove private mortgage insurance, which contributes significantly to the cost of the loan.
  • You can reduce your debts. Your debts have a dramatic impact on your house affordability.
  • You can improve your credit score. Improving your credit score can reduce your interest rates, which will also improve affordability.

If you’re really determined to buy a particular house, there are ways to make it happen. But, it’s important to be realistic about what you can afford and be prepared for the financial challenges that come with purchasing a home that’s out of your price range.

Why You Shouldn’t Buy More House Than You Can Afford

It’s tempting to want to stretch your budget to get a bigger and better house. But, it’s important to remember that a house is not just an investment. It can easily become a liability. The more expensive the house, the bigger the liability.

If you’re house poor, you’re going to have a hard time when saving money, investing money, and taking care of your other financial obligations. You may even find yourself falling behind on your mortgage payments or, worse, facing foreclosure.

Be realistic about what you can afford. It’s better to purchase a modest home that you can comfortably afford than to overextend yourself financially. You don’t want to be in a situation in which you can’t actually afford repairs to your home.

mortgage process


How much house you can afford is actually deceptively complex. You need to know how much you can afford a month and then calculate how much a property will cost you. How much a property will cost you will vary depending on the loan product, interest rates, and more.

Because of that, there’s no easy way to say whether you have the salary to afford a $700k house; it’s about more than salary. A loan officer can help.


How much house can I afford with a $70,000 salary?

If you make $70,000 a year or $5,833 a month, your monthly mortgage payment would be approximately $2,800. With taxes and fees, it might be over $3,400. So, if you’re looking at purchasing a $700K house, you might need to increase your income or make a larger down payment. Your affordability is closer to $400,000.

How much house can I afford with a $100,000 salary?

If you make $100,000 a year or $8,333 a month, your monthly mortgage payment would be approximately $3,800. With taxes and fees, it might be over $4,600. Your affordability is around $500,000.

How much house can I afford with a $200,000 salary?

If you make $200,000 a year or $16,667 a month, your monthly mortgage payment would be approximately $7,600. With taxes and fees, it might be over $9,100. So, if you’re looking at purchasing a $700K house, you should have no problem affording it.

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