How much income do you need to buy a $750,000 house? Let’s break down the income required for a $750K home to help you anticipate what will be on your mortgage pre-approval letter.
Note that homes in this price range are above the threshold for FHA loans in many parts of the country. Depending on where you live, you may need to consider a conventional mortgage.Â
Income Needed on a 750k Conventional Loan
If you can get approved for a conventional loan on a $750K house, your income needs will vary slightly based on the size of your down payment, your loan terms, and the interest rate given to you. These factors all influence the monthly payment.Â
Let’s look at a 30-year conventional loan for a $750,000 house with a 6% interest rate. This example considers the 28/36 rule of debt- more on this below.
- Down payment of 20% ($150,000)
- Estimated monthly mortgage payments of $4,212
Affordability on a $750k house with different debt ratios:
- $0 monthly debts: you could afford this on a $175K salary.
- $750 monthly debts: you could afford this on a $185K to $195K salary.
- $1,000 monthly debts: you could afford this on a $195K to $210K salary.
Keep in mind this is a general estimate that uses average costs for taxes and homeowner insurance. Considerations to these numbers:
- Lenders like to see 20% down with a conventional mortgage. However, you can put down as little as 3-5% if you’re willing to pay private mortgage insurance (PMI).Â
- Closing costs are separate from your down payment and due at closing. With closing costs averaging 5% of a loan amount, you’re looking at $30,000 to $35,650.
- Property taxes, home insurance premiums, and HOA fees vary widely.
- Use our mortgage calculator if you have numbers you’d like to plug in for a specific property.
Interest Rates Play A Part
If you could lower the rate by 1% by either purchasing mortgage points or locking in at the right time, a 5% rate brings your monthly payments to $3,836. That change makes this home affordable if you make $160,000 to $165,000 with zero monthly debts, $165,000 to $170,000 with monthly debts of $750, and $175,000 to $180,000 with monthly debts of $1,000.
Income Needed on a $750k FHA Loan
If you live in a high-cost-of-living (HCOL) area where the FHA limit is $750,000 or higher, you can obtain a mortgage of this size as an FHA borrower. FHA loans also require mortgage isurance.
Here’s your affordability on a 30-year FHA mortgage with a 6% interest rate:
You’ll need a 3.5% down payment of $26,000 and have a monthly payment of $5,535.
- $0 monthly debts: you could afford this on a $235k salary.
- $750 monthly debts: you could afford this on a $265k salary.
- $1,000 monthly debts: you could afford this on a $280k salary.
The 28/36 Rule
Lenders use the 28/36 rule to see if you qualify for a loan based on your debt to income ratio (DTI). No more than 28% of your income should go toward your house alone. No more than 36% of income should go toward all debts, housing included.Â
