Salary to Afford a 700k House
The salary needed to afford a 700k house will be based upon various factors including the mortgage program, property taxes, and current mortgage rates.
A salary of approximately $150k per year is needed to afford a $700k home. This is based upon the following assumptions (down payment of 20%, property taxes of $8k, interest rate of 5.5%, and other debt payments of $500 per month).
Factors when Determining Whether You Have the Salary to Afford a 700k House
The following will be determining factors when it comes to the salary needed to afford a 700k house.
- Steady and Consistent Income – When evaluating your income, lenders will be looking at the steadiness and consistency of your income. Meaning, have you been earning your current salary for the past two years or did you just get a large increase? Are you earning all of your income as a guaranteed base salary or does some of it come as bonuses or commissions?
- Down Payment – If you are buying a 700k house, the down payment that you are able to afford will play a major role in your ability to get qualified. The more that you put down, the less salary you will need to afford a 700k house. The larger down payment may also open up other mortgage programs that may otherwise not be available at this price range.
- Property Taxes – The monthly cost for property taxes will have a significant impact on how much salary is needed to afford a 700k house. Buying a home with cheaper taxes will help you to qualify.
- Homeowner’s Insurance – Just like property taxes, the monthly homeowner’s insurance costs will also play a role in your ability to afford the home. Start shopping for homeowner’s insurance at or around the time you are also looking for a mortgage lender.
- Other Consumer Debt – When a lender pulls your credit, they will see your other monthly payments that are tied to consumer debt or even other loans and mortgages. The total monthly payments on your credit report will be weighed against you in your debt to income ratio calculation. Therefore, you will want to avoid getting into debt where the payments will be high. If you are thinking about buying a car, we suggest waiting until after you close on your mortgage. It will be more difficult to qualify for a mortgage with a car loan.
- Mortgage Program – There are mortgage programs out there that will be better than others when buying a 700k house. For example, FHA loans allow for a higher debt to income ratio. This loan would be recommended but only if the FHA loan limits in that county are high enough. Meanwhile, there are No Doc Loans or Non QM Mortgages which may allow you to qualify without looking at your income.
- Interest Rates – The interest rate available to you will be instrumental in determining the salary needed to afford a 700k home. The lower the rate, the more you will be able to afford. Low rates are also partly responsible for large spikes in the housing market.
- HOA Fees – Home owners association fees (HOA’s) are a monthly expense that will directly reduce the amount you will qualify for. Therefore, we suggest searching for a home that does not have an HOA.
The salary needed for you to afford a 700k house will be different based upon these factors. Let us help you to find a way to make this work. Start by completing this short quote form and we will have a qualified loan officer contact you to discuss your scenario.
Down Payment Needed to Afford a 700k House
The down will play a huge factor in your ability to afford a 700k house. The more that you put down, the less income or salary you will need to afford the home. A large down payment is also considered to be a compensating factor when underwriters are evaluating your mortgage application. If your ability to qualify is borderline but you have a large down payment, that could push it over the edge for you.
If you are in an area where the FHA loan limit is high, then you can qualify with just 3.5% down. However, if your salary is not close to being high enough to qualify, then you may need a mortgage program that does not factor your income and the down payment for those programs are much higher (20-30%).
Will a Co-Signer Help to Afford a 700k House?
Adding a Co-signer may help you to afford a more expensive home. However, you are not only adding their income but you are also adding their credit score and other debt. If they have poor credit, then their scores will likely be used. If they have too much other consumer debt, then adding that person as a co-signer may not actually help.
If you know someone who is willing to co-sign for you then it would be a great idea to speak with a qualified loan officer to determine wither the co-signer will be beneficial to you.
Home Affordability Calculator – This will let you see how much home you can afford