What Income Do I Need To Afford A $500K House? | Bankrate (2024)

The housing market of the past few years sent home values skyward. And while prices have started course-correcting, they’re still relatively high — the median home price in the U.S. as of April 2023 was $388,800, meaning half of the homes sold had an even higher price tag.

So how much do you need to make to buy a $500,000 house? Let’s start by assuming you’ll spend about a third of your total income on housing (more on the 28 percent rule below). Bankrate’s mortgage calculator shows that for a $500,000 home purchase, assuming a 20 percent down payment and a 30-year mortgage loan at an interest rate of 6.5 percent, the monthly principal and interest payment will come to $2,528. Multiply that figure by 12 to come to an annual amount of $30,336. If that is a third of your earnings, multiply $30,336 by three to determine the minimum annual income you’ll need to afford a $500,000 home: $91,008.

Note that this total does not include property taxes, home insurance premiums or potential HOA fees, all of which vary depending on your location, nor does it include other monthly expenses or debts. So the salary needed to comfortably afford the payments without stretching yourself too thin will likely be more than $91K. Here’s more on how to determine if you can afford a $500,000 house.

Income needed to afford a $500,000 house

To figure out how expensive of a house you can afford, it helps to know how much of your income you should be spending on housing. One commonly used guideline is the 28/36 rule. This rule of thumb states that no more than 28 percent of your income should be spent on your housing payments, and no more than 36 percent should be spent on total debt (housing plus any student loans, credit card bills, car payments and more).

Keep in mind that the cost of homeownership involves much more than paying the principal and interest on your mortgage loan. You’ll need to also pay homeowners insurance and property taxes, both of which can vary wildly depending on where you’re located. You will also need to cover maintenance costs. That means general upkeep of the property, as well as repairs as needed. And if your home is part of a homeowners association, there will be HOA fees to pay as well.

As you may have noticed, location matters a lot when it comes to home prices. According to Redfin data, states with a median home sale price around $500,000 include Oregon ($493,600) and Utah ($520,500). Individual markets with medians close to $500,000 include Sacramento, California ($463,000), Charleston, South Carolina ($517,500) and Olympia, Washington ($525,000).

What factors determine how much you can afford?

Buying a home is a complex process, and it makes sense that a variety of factors come into play. Here are some factors you’ll need to weigh to estimate how much house you can afford.

Debt-to-income ratio

Your debt-to-income ratio, or DTI, is the percentage of your monthly income that you spend on paying off debt. In general, the lower your DTI, the better: A DTI of 36 percent or less is what most mortgage lenders want to see. (This figure may look familiar from the 28/36 rule earlier.)

Here’s a DTI example. Using the calculations at the top of the page, your monthly income from a $91,008 salary comes to $7,584, and your monthly interest and principal payments on a $500,000 house come to $2,528. Bankrate’s DTI calculator shows that with $2,528 in monthly debt and $7,584 in monthly income, your DTI would be 33 percent — safely below the threshold of 36 percent. However, that does not leave a lot of room leftover for other debt payments, so you’d have to be very careful with your other spending.

Down payment

Another major consideration is your down payment. For a $500,000 house, a 20 percent down payment is $100,000 — a large amount, but the more you pay upfront the less you’ll have to borrow, and so the lower your monthly payments will be. In addition, if you put down less than 20 percent, you’ll likely have to pay an extra monthly fee for private mortgage insurance. Many mortgage products will allow a much lower down payment, but again, that will result in higher monthly mortgage bills.

Loan-to-value ratio

Your loan-to-value ratio is a measurement that compares the value of the property you’re buying with the amount you’re borrowing to pay for it. Think of it as an inverse to your down payment: If you put 20 percent down, your LTV is 80 percent. Generally, the lower your LTV, the better.

Credit score

Your credit score can have a big impact on your mortgage payment, because a higher score means you’ll likely qualify for a better rate. To qualify for most types of mortgages, you’ll need a credit score of at least 620. Some loan types, such as FHA loans, accept lower scores, but a higher score will almost always get you the lowest available interest rate. And that could save you a significant amount over your loan term.

Assistance options

If you’re a first-time homebuyer, you may qualify for a government down payment assistance program. These are available at the local, state and even federal level, and they typically provide financial help to cover a down payment and closing costs. Low-income borrowers are often eligible for homebuying assistance as well, but if you’re buying a $500,000 home, you probably won’t qualify for those types of programs.

Stay the course until you close

Buying a house involves a lot of moving parts. Even once you’re in contract on a home, it’s important to stay on top of your finances until the deal is done. Don’t make any big moves that could affect your credit score (like applying for a new credit card) or your income circ*mstances (like changing jobs) while the underwriting process is underway.

Working with a trusted real estate agent can make the entire homebuying process easier and less stressful. An agent will guide you through finding the right house, making the right offer and negotiating a contract, and then see you through to closing. Whether you’re buying a $500,000 house or a $5,000,000 house, an experienced agent can help you make the right decisions with confidence.


  • Many considerations factor into whether you can afford a $500K house, most importantly your income. But your credit score, mortgage rate, down payment size and other debts all factor in as well.

  • In real estate, location is directly related to affordability. A $500,000 budget can get you a dramatically different house in some markets than others — a large home on a lot of land in a rural area versus a modest condo in a big city, for example. Consider the area’s cost of living as well: how much transportation, food, entertainment and other day-to-day needs cost can make a big difference.

  • To afford a $500,000 house, you need to make a minimum of $91,008 a year — and probably more to make sure you’re not house-poor and can afford day-to-day expenses, maintenance and other debt, like student loans or car payments. One good guideline to follow is not to spend more than 28 percent of your income on housing.

What Income Do I Need To Afford A $500K House? | Bankrate (2024)


What income is needed for a $500,000 mortgage? ›

In today's climate, the income required to purchase a $500,000 home varies greatly based on personal finances, down payment amount, and interest rate. However, assuming a market rate of 7% and a 10% down payment, your household income would need to be about $128,000 to afford a $500,000 home.

How much house can I afford if I make $36,000 a year? ›

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.

Can I afford a 500k house on 100k salary? ›

To afford a $500,000 house, you need to make a minimum of $91,008 a year — and probably more to make sure you're not house-poor and can afford day-to-day expenses, maintenance and other debt, like student loans or car payments. One good guideline to follow is not to spend more than 28 percent of your income on housing.

How much down payment for a 500k house? ›

Conforming loan down payments can vary from 3% to 20% or more, so for a $500,000 home, you'd need between $15,000 and $100,000. Conforming loans, once again, follow Fannie Mae and Freddie Mac guidelines and usually offer competitive terms.

How much salary to afford a 600k house? ›

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.

How much house can I afford if I make $70,000 a year? ›

As a rule of thumb, personal finance experts often recommend adhering to the 28/36 rule, which suggests spending no more than 28% of your gross household income on housing. For someone earning $70,000 a year, or about $5,800 a month, this means a housing expense of up to $1,624.

Can a single person live on $36,000 a year? ›

If you want to have a minimalist lifestyle, 36k/year is more then enough. If you want a home, family, car, insurance and some "toys", it's not going to be enough, at least in a majority of places in the U.S. But again, the term "decent" is pretty objective.

Can someone who makes 40k a year afford a house? ›

How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.

Can I afford a house if I make 35000 a year? ›

A person making $35,000 may be able to afford a mortgage around $170,000. The mortgage amount you'll qualify for ultimately depends on your credit score, debt and current interest rates.

What income do I need to afford a $550K house? ›

Income to afford a $550K house

Now, let's apply that rule to an annual income of $126,000. A $126,000 salary breaks down to $10,500 per month. Limiting housing costs to 28 percent of your monthly income would cap your mortgage payments at $2,940.

How much is 100k a year hourly? ›

$100,000 a year is how much an hour? If you make $100,000 a year, your hourly salary would be $48.08.

How much is a 500k mortgage per month? ›

The monthly cost of a $500,000 mortgage is $3,360.16, assuming a 30-year loan term and a 7.1% interest rate. Over the course of a year, you would pay $40,321.92 in combined principal and interest payments.

What credit score is needed to buy a $500k house? ›

Expect most mortgage lenders to want minimum credit scores of 620 or even 640.

How much do most first-time home buyers put down? ›

How Much Is The Average Down Payment On A House? The average first-time buyer pays about 6% of the home price for their down payment, while repeat buyers put down 17%, according to data from the National Association of REALTORS® in late 2022.

Is 500k a lot of money? ›

Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.

What is the average monthly payment on a $500000 mortgage? ›

As noted above, your estimated monthly payment for a $500K mortgage will be $3,360.16, assuming a 30-year loan term and an interest rate of 7.1%. But this payment could range between $2,600 and $4,900 depending on your term and interest rate.

How much house can I afford with a 60k salary? ›

The 28/36 rule holds that if you earn $60k and don't pay too much to cover your debt each month, you can afford housing expenses of $1,400 a month. Another rule of thumb suggests you could afford a home worth $180,000, or three times your salary.

How much house can I afford with an 80k salary? ›

Using the 28% to 30% rule, your ideal maximum monthly payment shouldn't exceed $1,866 and $2,000. With that being said, if you're getting a 30-year fixed-rate mortgage with a 6% interest rate, you can likely afford a home valued up to $263,000 (including property taxes and insurance, and assuming a 5% down payment).

How much mortgage can I afford with 50k income? ›

If you earn $50,000 per year, you earn about $4,166.67 per month. At 28% of your income, your mortgage payment should be no more than $1,166.67 per month. Considering a 20% down payment, a 6.89% mortgage rate and a 30-year term, that's about what you can expect to pay on a $185,900 home.

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