What is the down payment & income needed for a $600k home? (2024)

FAQs

What income do you need for 600K mortgage? ›

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.

If you're thinking of applying for a $600K mortgage, here's the bottom line: The monthly payment on this mortgage at a 7% annual percentage rate (APR) for 30 years works out to be $3,991.81.

Here's how the rule works for the annual income of $151,200, as determined above. Dividing by 12 for a monthly amount comes to $12,600, and 28 percent of $12,600 is $3,528 — almost exactly equal to the monthly principal and interest figure roughly determined above.

Conventional loan financing is typically best for borrowers with good or excellent credit because they require a higher credit score than government-backed loans. To secure a conventional loan to buy a house, most lenders typically require a minimum credit score of 620.

A $100K annual salary breaks down to about $8,333 per month. Applying the 28/36 rule, 28 percent of $8,333 equals $2,333. That's notably less than our estimated monthly home payment on a $600,000 house, $3,700, so no, you probably cannot reasonably afford a home purchase of that amount on your salary.

A $700,000 house on a 30 year repayment and 7% interest is $4,567 per month. That's just the mortgage. 20% down is $140,000. Mortgage debt to income ratio should not exceed 36%.

To determine how much money you need to earn annually to afford a one million dollar home based on the 2.5 times your income rule, you simply need to divide $1 million by 2.5. So, this rule suggests you need to earn $400,000 annually to afford a $1 million home.

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.

In its March Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.1% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the first quarter of 2025.

What is the current interest rate? ›

If you have a conventional loan, $800 in monthly debt obligations and a $10,000 down payment, you can afford a home that's around $250,000 in today's interest rate environment.

Now, Americans must earn roughly $106,500 in order to comfortably afford a typical home, a significant increase from the $59,000 annual household income that put homeownership within reach for families in 2020, according to new research from digital real estate company Zillow.

According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance.

In addition to your monthly income from wages earned, this can include social security income, rental property income, spousal support, or other non-taxable sources of income. Your work history: This helps lenders understand how stable your income is and how likely you are to repay your mortgage.

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.

To afford a $500K home with a 5% down payment ($475K Loan Amount), you need to make at least $85K. To afford a $750K home with a 10% down payment ($712.5K Loan Amount), you need to make at least $125K. To afford a $1M home with a 20% down payment ($800K Loan Amount), you need to make at least $140K.

As a general guideline, it's often recommended to limit your housing expenditure to no more than about one-third of your income. And so, to determine approximately how much income you would need to afford a $550K home purchase, triple $42,000: You'd need an annual income of at least $126,000.

On a salary of $45,000 per year, you can afford a house priced at around $120,000 with a monthly payment of $1,050 for a conventional home loan — that is, if you have no debt and can make a down payment. This number assumes a 6% interest rate.