Shopping for a $700k house is a giant milestone however how a lot do you really want to earn to afford it? Whereas your down fee, credit score rating, and debt all play a job, the revenue wanted for a $700k mortgage is the most important think about figuring out whether or not this home matches your finances.
Whether or not you’re planning to purchase a home in Philadelphia, PA or a townhome in Chicago, IL, this Redfin information will stroll you thru what to anticipate and put together.
The brief reply
- Most consumers have to earn $175,000 to $235,000 per 12 months to afford a $700,000 dwelling.
- This assumes common rates of interest, a typical mortgage time period, and a modest down fee.
- Your precise revenue wants might differ primarily based in your debt, credit score rating, and month-to-month bills.
What’s the revenue wanted for a $700k home?
A great place to begin is the 28/36 rule, a standard customary utilized by mortgage lenders:
- 28% rule: Your month-to-month housing prices (together with mortgage, taxes, insurance coverage) ought to be not more than 28% of your gross month-to-month revenue.
- 36% rule: Your complete month-to-month debt (housing + bank cards, auto loans, pupil loans, and so on.) ought to keep beneath 36% of your gross revenue.
For instance, in case your estimated month-to-month housing price is $4,000, you’d have to earn round $175,000 per 12 months to remain inside these limits. That revenue requirement could also be greater when you have extra debt or stay in an space with excessive property taxes or insurance coverage prices.
Calculator>> How A lot Home Can I Afford?
Pattern Situation: What $700k appears like in month-to-month prices
Let’s stroll by means of a primary instance.
- Dwelling worth: $700,000
- Down fee: 20% ($140,000)
- Mortgage quantity: $630,000
- Rate of interest: 7.00% (30-year fastened)
Estimated month-to-month mortgage fee (P&I): ~$3,726/month
Property taxes + owners insurance coverage: ~$1,009
Complete estimated month-to-month housing price: ~$4,735
On this case, a purchaser would seemingly have to earn round $203,000 yearly to qualify comfortably. If additionally they had $1,000 in different month-to-month money owed (bank cards, automotive loans, and so on.), their required revenue would seemingly rise.
Take into account that placing down lower than 20% typically means including non-public mortgage insurance coverage (PMI), which bumps up your month-to-month fee and pushes the required revenue even greater.
Elements that influence how a lot home you’ll be able to afford
The revenue wanted for a $700k mortgage isn’t nearly your wage. Listed here are six main components that affect your affordability:
1. Down fee
A bigger down fee lowers your mortgage quantity, reduces your month-to-month fee, and may help you keep away from PMI.
- 20% down avoids PMI and saves on curiosity
- 10% down means a better month-to-month price
- 3% down may go for first-time consumers however comes with added charges
2. Credit score rating
Increased scores often unlock higher rates of interest, which may prevent tons of of {dollars} every month.
Learn>> How To Purchase A Home With Unhealthy Credit score
3. Rate of interest
Only a 1% distinction in your mortgage charge can shift your month-to-month fee by tons of. For a mortgage this dimension, it issues. For instance, on a $700k dwelling with 10% down:
- At 6.5%, your month-to-month fee is likely to be $4,400
- At 7.5%, it may soar to $4,950
As of June 2025, the common 30-year fastened charge is round 7%, which is greater than charges seen in prior years.
4. Debt-to-income ratio (DTI)
Lenders look intently at how a lot of your revenue is already dedicated to different money owed. A decrease debt-to-income ratio (DTI) means extra borrowing energy.
5. Location-based prices
Property taxes and insurance coverage differ by area and so they’re included in your month-to-month housing prices.
As an illustration, the distinction proven within the examples beneath may add tons of to your month-to-month prices:
- In Westchester County, NY or Prepare dinner County, IL, annual property taxes on a $700k dwelling may exceed $10,000
- In Maricopa County, AZ or Bexar County, TX, you may pay nearer to $3,500 to $6,000
6. Ongoing obligations
Little one help, alimony, and even HOA charges shall be factored into your mortgage eligibility.
7. Financing
The mortgage kind (whether or not typical, FHA, VA, or one other mortgage) you select impacts your charge, down fee, and month-to-month price. Many states and cities supply down fee help or grant applications for first-time or income-qualified consumers, which may help cut back upfront bills and make a $700k mortgage extra attainable.
What it takes to afford a $700k dwelling: Purchaser situations
Let’s evaluate three totally different purchaser profiles to see how variables like down fee, credit score rating, and debt have an effect on revenue necessities:
| Purchaser Profile | Down Fee | Credit score Rating | Price | Debt | Month-to-month Fee (PITI) | Estimated Earnings |
|---|---|---|---|---|---|---|
| Conservative Purchaser | 20% ($140,000) | Glorious (760+) | 6.75% | $300 | ~$4,641 | ~$199,000 |
| Typical Purchaser | 10% (70,000) | Good (700-740) | 7.00% | $600 | ~$5,594 | ~$240,000 |
| Low Down Fee Purchaser | 5% ($35,000) | Honest (660–680) | 7.25% | $1000 | ~$5,961 (incl. PMI) | ~$255,000 |
These numbers provide you with a ballpark concept, however your precise mortgage eligibility will rely in your particular monetary image.
Ideas that will help you afford a $700k mortgage
If the numbers really feel simply out of attain, these methods can enhance your odds:
- Enhance your credit score rating: Decrease rates of interest imply decrease funds.
- Pay down debt: Decreasing your DTI expands your mortgage choices.
- Improve your down fee: Even an additional 5% could make a giant distinction.
- Store round for lenders: Charges, charges, and mortgage applications differ.
- Discover down fee help: Native applications may assist bridge the hole, particularly for first-time homebuyers.
- Add a co-borrower: A associate or partner with revenue may help you qualify.
- Work with a actual property agent: An agent may help you keep on finances and negotiate higher offers.
- Give attention to financial savings: Build up your financial savings for a bigger down fee can decrease your month-to-month prices and make it simpler to qualify for a $700k mortgage.
Learn>> What You Have to Purchase a Home in 2025
FAQs: Your $700k mortgage questions answered
1. Can I afford a $700k mortgage on $150k revenue?
In all probability not, until your money owed are very low and you’ve got a large down fee. Most consumers want nearer to $170k-$200k yearly.
2. What if my credit score rating is below 700?
You may nonetheless qualify, however it’s possible you’ll face greater charges, which is able to elevate your required revenue.
3. Is it higher to place 10% or 20% down?
Placing 20% down avoids PMI and lowers your month-to-month price however 10% down should still be an excellent choice if that’s what your finances permits.
4. Ought to I embrace HOA charges when calculating affordability?
Completely. Lenders think about HOA charges as a part of your complete month-to-month housing expense.
5. How can I test how a lot home I can afford?
Use an on-line mortgage calculator or converse to a lender for a personalised estimate.
6. The place can I discover $700,000 properties?
Use Redfin’s dwelling search software to discover listings in your goal space. You may set worth filters, view tax estimates, and get alerts for brand spanking new listings or worth drops.
