How Much Do I Need to Make to Afford a $700K House?

You typically need between $151,200 and $235,000 in annual household income to afford a $700,000 home, depending on your down payment size, credit score, and existing debt:

• With a 20% down payment ($140,000) and excellent credit, the minimum is around $151,200 annually based on the 28/36 rule that lenders use.
• With smaller down payments like 10% down, you'll need closer to $235,000 annually due to higher monthly payments and private mortgage insurance (PMI) costs.

The figures above are calculated assuming moderate property taxes and insurance costs. High-tax states like New Jersey or high-insurance areas will require even higher incomes.

Understanding how much income you need for a $700,000 house requires breaking down several key factors that lenders consider when approving your mortgage application.

The 28/36 Rule and How It Applies to a 700K House

Lenders use the 28/36 rule as their primary guideline for mortgage approval.

This means no more than 28% of your gross monthly income should go toward housing costs (PITI - principal, interest, taxes, and insurance), and no more than 36% toward total debt obligations including credit cards, student loans, and car payments.

This conservative approach ensures you can comfortably handle your mortgage payments without becoming house poor.

Monthly Payment Breakdown

For a $700,000 home with a 20% down payment ($140,000), you'd finance $560,000. At a 6.5% interest rate on a 30-year mortgage, your principal and interest payment would be approximately $3,539 monthly.

Adding estimated property taxes ($583 monthly) and homeowners insurance ($83 monthly) brings your total housing cost to around $4,205 per month.

Using the 28% rule, you'd need a minimum gross monthly income of $15,018, or $180,216 annually.

Down Payment Impact on Income Requirements

Your down payment significantly affects how much income you need:

• With 15% down ($105,000), you'd finance $595,000, creating a monthly P&I payment of $3,761. Adding PMI at 0.5% annually ($248 monthly) plus taxes and insurance brings your total to $4,675 monthly, requiring $200,893 annual income.
• With just 10% down ($70,000), you'd finance $630,000 with a $3,983 P&I payment. PMI jumps to $315 monthly, creating a total housing cost of $4,964 monthly and requiring $212,743 annual income.

Credit Score and Interest Rate Effects

Your credit score dramatically impacts your interest rate and required income. Excellent credit (740+) might secure 6.5% rates, while good credit (680-739) could mean 7.0% rates. Each percentage point increase adds roughly $350-400 to your monthly payment.

A borrower with a 7.5% rate instead of 6.5% would pay an additional $700 monthly, requiring about $30,000 more annual income.

Regional Variations Matter

Property taxes vary wildly by location. Hawaii averages 0.27% annually while New Jersey hits 2.23%. On a $700,000 home, that's $1,890 versus $15,610 annually - a difference of $1,143 monthly.

Insurance costs also fluctuate based on natural disaster risks, with coastal and wildfire-prone areas seeing premiums 2-3 times higher than low-risk regions.

Existing Debt Considerations

The 36% debt-to-income ratio includes all monthly debt payments. If you have $1,000 monthly in student loans and credit card payments, your maximum total debt service drops accordingly.

This could increase your required income by $40,000-60,000 annually depending on your housing costs.

Jumbo Loan Requirements

In most areas, $700,000 exceeds conforming loan limits, requiring a jumbo mortgage with stricter requirements.

Jumbo loans typically demand higher credit scores (720+), larger down payments (10-20%), and lower debt-to-income ratios (43% maximum instead of 50%).

Practical Strategies

To improve affordability, consider increasing your down payment to reduce monthly payments and eliminate PMI. Paying down existing debt before applying can significantly lower your required income.

Target an income 15-25% above minimum calculations for financial safety and unexpected expenses.

The table below shows exactly how much annual income you need for a $700,000 house based on different down payment amounts. These calculations assume a 6.5% interest rate, excellent credit, and include estimated property taxes, insurance, and PMI where applicable.