Buying a $700k home is a big milestone but how much do you really need to earn to afford it? While your down payment, credit score, and debt all play a role, the income needed for a $700k mortgage is the biggest factor in determining whether this house fits your budget.
Whether you’re planning to buy a house in Philadelphia, PA or a townhome in Chicago, IL, this Redfin guide will walk you through what to expect and how to prepare.
The short answer
- Most buyers need to earn $175,000 to $235,000 per year to afford a $700,000 home.
- This assumes average interest rates, a standard loan term, and a modest down payment.
- Your actual income needs may vary based on your debt, credit score, and monthly expenses.
What is the income needed for a $700k house?
A good starting point is the 28/36 rule, a common standard used by mortgage lenders:
- 28% rule: Your monthly housing costs (including mortgage, taxes, insurance) should be no more than 28% of your gross monthly income.
- 36% rule: Your total monthly debt (housing + credit cards, auto loans, student loans, etc.) should stay below 36% of your gross income.
For example, if your estimated monthly housing cost is $4,000, you’d need to earn around $175,000 per year to stay within these limits. That income requirement may be higher if you have additional debt or live in an area with high property taxes or insurance costs.
Calculator>> How Much House Can I Afford?
Sample Scenario: What $700k looks like in monthly costs
Let’s walk through a basic example.
- Home price: $700,000
- Down payment: 20% ($140,000)
- Loan amount: $630,000
- Interest rate: 7.00% (30-year fixed)
Estimated monthly mortgage payment (P&I): ~$3,726/month
Property taxes + homeowners insurance: ~$1,009
Total estimated monthly housing cost: ~$4,735
In this case, a buyer would likely need to earn around $203,000 annually to qualify comfortably. If they also…