How Much Income You Need to Buy a $600k, $700k, and $800k House

Are you just getting started on your homebuying journey? If so, you may wonder if you earn enough to qualify for a mortgage to buy a home you really want. While every borrower's situation is different, we've put together some example scenarios to give you a good idea of how much income you need to buy a $600k, $700k, and $800k house with 5% down.

How Much Income Do You Need to Buy a $600k House?

In our example scenario, which we’ll fully detail at the bottom of this article, someone purchasing a $600k property would incur a monthly mortgage payment of $4,870. To qualify for this payment, you would need a minimum monthly income of $13,528 – around $162,336 per year.

How Other Debts Affect the Income Needed for a $600k House

Lenders would let you have total monthly debts (home payment plus other debt payments) of up to $6,088 with an income of $13,528. We base these figures on a 45% back-end debt-to-income (DTI) ratio. This means 45% of your gross income goes toward housing and debt payments.

Deducting the mortgage you’re applying for, this figure would allow for up to $1,198 in other monthly debt payments.

If you have auto loans, credit card minimums, or other installment debts in excess of $1,198, you'll need a higher income level to qualify for your mortgage.

Income Needed to Buy a $600k Home by Interest Rate

Our example scenario uses an interest rate of 6.992%. If the rate you receive is much different, your payments and income requirements could change significantly.

Here is a chart of the monthly payments and income needed for a $600k house based on a range of interest rates.

Buying a $600k House With a Larger Down Payment

We've assumed a 5% down payment for your purchase. However, a bigger down payment will lower your mortgage payment, and therefore the income you need for a $600k house. Putting 20% or more down will eliminate the requirement for private mortgage insurance and further cut your costs.

Income Needed for a $600k Mortgage (Not Home Price)

Are you purchasing a home over $600k and applying for a $600k mortgage? In that case, you should plan for monthly payments of around $5,105. Based on that payment, the monthly income needed for a $600k mortgage would be in the ballpark of $14,181.

How Much Income Do You Need to Buy a $700k House?

If you're in the market for a $700k home, you can expect monthly payments of approximately $5,615. Based on our standard assumptions, this would require an income of at least $15,597 per month – $187,164 annually.

How Other Debts Affect the Income Needed for a $700k House

Based on the minimum required income of $15,597, you could have total debt obligations as high as $7,019. This equates to around $1,404 in other debt payments on top of your mortgage, including things like outstanding car loans and student debt.

Here’s an idea of how having a higher level of existing debt could affect the income needed for a $700k house.

Income Needed to Buy a $700k Home by Interest Rate

Your actual income needed to buy a $700k home can vary depending on the interest rate that you receive. Our calculations are based on an assumed interest rate of 6.992%, but the quotes that you're offered will likely differ.

Here are the payments and income levels needed to buy a $700k home at assorted interest rates.

Buying a $700k House With a Larger Down Payment

Want to reduce the amount of income needed to buy a $700k house? The larger your down payment, the lower your monthly costs and the less income you’ll need to qualify. Here's what making down payments ranging from 5% to 20% could do to the numbers.

Income Needed for a $700k Mortgage (Not Home Price)

Is $700k the size of the loan that you’re applying for? In that case, your monthly payment would be around $5,889 based on our methodology. With an allowed 36% housing ratio, the minimum income needed for a $700k mortgage would be $16,358.

How Much Income Do You Need to Buy an $800k House?

According to our methodology, the monthly payment on an $800k home would be around $6,360. With a standard 36% front-end DTI, this loan would require a monthly income of $17,667 or higher – at least $212,004 per year.

How Other Debts Affect the Income Needed for an $800k House

With an income of $17,667, most lenders would allow you to have total debts as high as $7,950. This equates to around $1,590 in loan payments other than your mortgage. Keep in mind that optional payments such as a gym membership or streaming service subscription don't count towards this figure, as they are not due to debt.

Income Needed to Buy an $800k Home by Interest Rate

Over the past few years, we've seen a wide range of interest rates offered to homebuyers. Our estimates in this article are based on a 6.992% interest rate. However, some borrowers will be quoted lower while others will be quoted higher.

In addition, lender credits and discount points can affect your interest rate even further. Here's the income needed to buy an $800k home at different rates.

Buying an $800k House With a Larger Down Payment

Have more than 5% to put down toward your purchase? By putting 10% or more down, you can reduce your monthly payment and the income needed to be eligible for a loan. Putting 20% down could reduce the monthly income needed for an $800k house by nearly $3,000.

Income Needed for an $800k Mortgage (Not Home Price)

If you need to take out a full $800k mortgage to purchase your home, you could expect your monthly payments to be around $6,673. Based on this payment amount, the income needed for an $800k mortgage would be $18,536.

Actual Income Requirements for a $600k, $700k, or $800k House

The example scenario in this article is just that: an example. While it can be a great estimation for the income needed to buy a $600k, $700k, or $800k house, your actual figures will vary based on your finances, credit score, and choice of lender.

To take the next step and determine precisely how much home you can afford based on your current qualifying income, check out today’s best mortgage rates and apply with one of the lenders serving your community.

Methodology for Mortgage Calculations

We've shown how a few factors can impact the income needed to buy a home, but this is far from a comprehensive list. The actual cost of a mortgage is going to vary from one borrower to the next.

In some areas, high taxes and insurance costs can make the payments – and required income – for a $600k, $700k, or $800k house far greater. Conversely, buyers in lower-cost locales could see figures well below our estimates.

For our calculations, except where otherwise noted, we assumed that:

• Payments are based on a 30-year fixed-rate conventional loan

• Borrowers qualify for an example interest rate of 6.992% – the 30-year average according to the MRC rate tracker at the time of writing

• Borrowers are making a 5% down payment – the minimum required for most conventional loans (some buyers may be eligible with just 3% down)

• Lenders follow conventional guidelines allowing for a 36% front-end DTI and a 45% back-end DTI

• Property taxes are included in the monthly payments at an annual rate of 1% of the purchase price

• Homeowners insurance is included in the monthly payments with a premium of $400 per month

• Mortgage insurance costs are based on a credit score of 760 in accordance with current MGIC rates

• Borrowers are not responsible for any homeowners association dues and are not wrapping any closing costs into their mortgage