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The 28/36 rule stipulates that in order for a home to be considered within your budget, your housing expenses (such as mortgage payments, taxes and insurance payments) shouldn't exceed **28% of your gross monthly income**.

To calculate 'how much house can I afford,' a good rule of thumb is using the 28%/36% rule, which states that you shouldn't spend more than **28% of your gross monthly income on home-related costs and 36% on total debts**, including your mortgage, credit cards and other loans like auto and student loans.

1. **Multiply Your Annual Income by 2.5 or 3**. This was the basic rule of thumb for many years. Simply take your gross income and multiply it by 2.5 or 3 to get the maximum value of the home you can afford.

What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your **monthly income should be at least $8200** and your monthly payments on existing debt should not exceed $981. (This is an estimated example.)

When attempting to determine how much mortgage you can afford, a general guideline is to multiply your income by at least 2.5 or 3 to get an idea of the maximum housing price you can afford. If you earn approximately $100,000, the maximum price you would be able to afford would be **roughly $300,000**.

Your budget and financial situation will determine how much you can afford on a 100k salary, but in most cases, **you'll likely qualify for a home worth between $350,000 to $500,000**.

That said, if you make $200,000 a year, it means you can likely afford a home **between $400,000 and $500,000**.

What annual salary do you need to afford a million-dollar house? Experts suggest you might need an annual income between **$100,000 to $225,000**, depending on your financial profile, in order to afford a $1 million home.

For homes in the $800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in **$119,371 before tax**, assuming a 30-year loan with a 3.25% interest rate.

The Income Needed To Qualify for A $500k Mortgage

A good rule of thumb is that the maximum cost of your house should be no more than 2.5 to 3 times your total annual income. This means that if you wanted to purchase a $500K home or qualify for a $500K mortgage, your minimum salary should fall **between $165K and $200K**.

Safe debt guidelines

So start by doing the math. If you make $50,000 a year, your total yearly housing costs should ideally be no more than $14,000, or $1,167 a month. If you make $120,000 a year, you can go up to **$33,600 a year, or $2,800 a month**—as long as your other debts don't push you beyond the 36 percent mark.

Expect to need at least $100K of income for a $1M home

But if your finances aren't quite as strong, you might need an income **upwards of $225K per year** to buy that million-dollar home.

So if you earn $70,000 a year, you should be able to spend **at least $1,692 a month — and up to $2,391 a month** — in the form of either rent or mortgage payments.

The 35% / 45% model. With the 35% / 45% model, your total monthly debt, including your mortgage payment, **shouldn't be more than 35% of your pre-tax income, or 45% more than your after-tax income**. To calculate how much you can afford with this model, determine your gross income before taxes and multiply it by 35%.

How much do I need to make for a $250,000 house? A $250,000 home, with a 5% interest rate for 30 years and $12,500 (5%) down requires an annual income of **$65,310**.

If you want to do the math on your own, the quickest way to estimate a reasonable range for your home purchase is to multiply your annual salary by 3 on the low end and 4 on the high end. So, if you make $80,000 a year, you should be looking at homes priced between **$240,000 to $320,000**.

If you make $3,000 a month ($36,000 a year), your DTI with an FHA loan should be no more than $1,290 ($3,000 x 0.43) — which means you can afford a house with a monthly payment that is **no more than $900 ($3,000 x 0.31)**. FHA loans typically allow for a lower down payment and credit score if certain requirements are met.

High Balance Conforming Loans

With 20% down, homes valued from $685,314 to $1,027,969.00 fall into this loan category. The final sales price of a home would need to be **no greater than $905,750.00** to achieve that $4,000 a month mortgage.

Your **monthly payment on a 600k mortgage would be $3,477**. Which is your total estimated monthly payment which includes the principal and interest, taxes, and mortgage insurance. For a $667,000 home, your mortgage payment will be $3,479. This is calculated at 3.5 percent interest and a 10 percent down payment ($67,000).

The national average for a 30-year fixed-rate jumbo loan mortgage is around 3.5%. At that rate, the monthly mortgage payment for a $2 million home will be around **$7,800 per month**, with a 20% down payment.

At the end of a 30-year mortgage, interest at 3.25% will add $1,300,000 to the home's total cost. A 15-year mortgage brings the extra interest down to $635,000. But then the monthly payment will be **around $20,000**.

To afford a $5 million home, you'll need an annual pretax income of **at least $840,000** with other stellar credentials such as a high credit score and savings.

Pew defines the upper class as **adults whose annual household income is more than double the national median**. In 2022, the national median household income is around $74,000. Therefore, as a whole, the typical upper-class household in the new decade has a median household income of over $130,000.

1. An average of **6.68%** of US households make over 200k.

According to the survey, **5.7%** of all U.S. households earn more than $200k annually.