How Much Salary Do I Need to Afford a $700k House?

The lender's question and yours

"Can I afford a $700,000 house" sounds like one question. It is two, and they have different answers often enough that the gap between them is worth a page of its own.

The first question is whether a lender will approve you. That is an arithmetic test on your income and your debts, it is the same test at almost every lender, and you can work out the answer before you speak to anyone. Every affordability calculator on the internet answers this one.

The second question is whether you will be all right afterwards. That depends on things a lender never asks about: what you spend, what you have saved, what the house will need doing to it, and how much slack you have when something goes wrong. No lender is measuring that, because a lender is not underwriting your life. It is underwriting a loan against a house it can repossess.

The calculator below answers both, and tells you when they disagree.

What a $700,000 house costs each month

Three deposits, priced at 6.7% over 30 years. The last column is the income a lender wants at that deposit, and it is the column most people are surprised by.

The deposit changes three things at once. It shrinks the loan, which everyone expects. It decides whether mortgage insurance applies at all, which costs more than most people expect. And it sets how long that insurance lasts: 9 years 4 months at 10% down against 11 years 6 months at 5%, because the balance has further to fall before it reaches the 78% of value at which the premium comes off by law.

Maintenance is the same $583 in every row. It is charged on the house, not on the loan, so a larger deposit does not make a roof cheaper. That single line is larger than the property tax and the insurance put together, and it is the one every affordability calculator leaves out.

The 28/36 rule, and what it leaves out

Almost every lender in the United States starts from the same two limits. Your housing costs should stay under 28% of your gross monthly income, and your housing costs plus every other debt payment should stay under 36%. Whichever of the two bites first is the one that decides.

Housing here means principal, interest, property tax, homeowners insurance, mortgage insurance and any HOA fee. Lenders call it PITI, and they include it whether you pay those bills yourself or the lender collects them monthly into an escrow account. Other debt means the payments on credit cards, car loans, student loans and personal loans. It does not mean groceries, utilities, childcare or petrol, none of which appear anywhere in the test.

The rule is a convention rather than a law. Government-backed programs routinely allow more, some lenders will stretch it for a strong credit profile, and automated underwriting has approved plenty of loans above 43% total debt. Which is worth knowing for a reason that has nothing to do with getting approved: the ceiling is higher than most people assume, so passing the test is weaker evidence than it feels like.

Three things it never measures are the three that decide whether the purchase works.

What you actually spend. Two households on identical incomes, one with two children in daycare and one without, get the same answer from the 28/36 rule. They do not have the same amount of money.

What is left in the bank on completion day. The rule is a test of monthly cash flow. Someone can clear it comfortably having spent every dollar they own on the deposit.

Upkeep. The roof, the boiler, the water heater, the trees. It is not a debt owed to the lender, so it is not in the lender's arithmetic, and on a house at this price it is the single largest line the test ignores.

The test that says yes when the answer is no

Take a household earning $195,000 with $170,000 saved, $500 a month of other debt, and $140,000 to put down.

A lender approves this. The 28% housing limit allows $4,550 a month and the house needs $4,459, so it clears by $91. Every calculator on the first page of results would return the same yes.

Then closing day arrives. $140,000 goes to the deposit and $21,000 to closing costs, which leaves $9,000. The house costs $5,043 a month to keep, so 3 months of it is $15,128. The purchase is approved, completed, and $6,128 short of a reserve.

Nothing about that household is reckless. They earn well, they saved $170,000, and they put a fifth of the price down. After income tax of roughly $4,550 a month and $4,500 of living costs, $1,657 a month is left over. That rebuilds the reserve in four months, as long as nothing happens during those four months. The furnace, the job, the car: whichever arrives first is what turns an affordable house into a problem.

This is the case worth building a page around, because nothing about it looks like a mistake from the outside. The income is strong, the deposit is a full fifth of the price, and the lender said yes. The problem is not the monthly payment. It is that the deposit and the closing costs together took almost everything, and what is left would not cover two months of the house.

It is also the most common way a purchase that looked fine on paper turns into a bad few years. Not a default, usually. Something smaller and slower: a credit card balance that starts growing the month the water heater goes, and never quite comes back down.

What happens if one income stops

The 28/36 rule is applied to household income, so a couple who both work are assessed on both salaries. The mortgage is then owed by both of them for thirty years, during which the chance that both keep earning without interruption is not one.

Run it on the household above. Suppose the $195,000 is two salaries, $115,000 and $80,000, and the larger one continues while the smaller one stops. Gross income falls to $115,000, which is $9,583 a month. After roughly a quarter goes to federal, state and payroll tax, about $7,200 arrives in the account.

The house still costs $5,043 a month, and the other debt still costs $500. That leaves around $1,650 for food, utilities, transport, insurance and everything else, in a household that was previously spending about $4,500 on those things. It is not immediately a disaster. It is a household that now has to cut its spending by nearly two thirds, at the same time as one person is looking for work, with under two months of housing costs in reserve.

This is why the reserve test matters more than it looks. Three months of the full housing cost is not a comfortable buffer. It is the amount that turns a bad quarter into an inconvenience rather than a decision about the house. Six months is better, and on a purchase at this price it is worth delaying for.

The same arithmetic applies to a rate reset. If the loan is a fixed thirty-year, the payment cannot move and this section is about job loss only. If it is an adjustable rate, run the calculator again at the highest rate the loan allows, which will be in the paperwork as a lifetime cap, and treat that number as the real one.

The cash you need on the day

The monthly figure gets all the attention because it is the one in the advert. The one-off costs are what actually empty the account, and they all arrive within about a fortnight of each other.

Closing costs run 2% to 6% of the price, which is $14,000 to $42,000 on this house. They cover the lender's origination fee, the appraisal, the title search and title insurance, recording fees, and the property tax and insurance the lender collects upfront to open the escrow account. Some are negotiable and some are fixed by the county. You will see a real number on the Loan Estimate within three business days of applying, and a final one on the Closing Disclosure three days before completion. Read both, and compare them to each other.

The inspection costs a few hundred dollars and is worth every dollar. It does not fix anything. It gives you a list, and a reason to renegotiate.

Moving is a few hundred dollars across town and several thousand across the country.

Furnishing the rooms you did not have before. People moving up in size consistently underestimate this, because the rooms are empty on the day you get the keys and stay empty until they are paid for. A house at $700,000 usually has more rooms than the place being left behind.

The first repair. Not the average repair, the first one. Whatever the inspection flagged and the seller declined to fix is now yours, and it does not wait for the reserve to be rebuilt.

Where you buy changes the answer more than what you buy

Property tax is set locally, and the spread across the United States is far wider than most buyers expect. Effective rates run under 0.4% of value in Hawaii and above 2% in New Jersey and Illinois, with most states somewhere between 0.8% and 1.5%.

On a $700,000 house that is the difference between about $292 a month and about $1,283 a month. Nearly a thousand dollars, every month, for thirty years, on identical houses at an identical price. It is larger than the difference between a good interest rate and a bad one.

Two things follow. The first is that a national average, including the 1.1% used here, is close to meaningless for your actual purchase. Look up the rate for the county you are buying in, and put it into the calculator. The second is that many counties reassess property at the point of sale, so the tax the current owner pays can be well below the tax you will pay for the same house. Ask what the assessed value will be after the sale, not what the current bill is.

Homeowners insurance has developed the same problem, faster. Premiums in parts of Florida, Louisiana, California and Colorado have moved enough in recent years that a national average is no longer a useful starting point. Get a real quote for the actual address before you commit, not after.

Which loan you use changes it too

Most buyers at this price are looking at a conventional loan, which is what the figures above assume. It is worth knowing what the alternatives do to the arithmetic.

Conventional loans need 3% down at the absolute minimum, 5% more typically, and 20% to avoid mortgage insurance. The insurance comes off automatically once the balance reaches 78% of the original value, and you can ask for it at 80%. That cancellation is the important part, and it is the reason a conventional loan with 10% down usually beats an FHA loan at this price.

FHA loans allow 3.5% down with a credit score of 580 or above, which is the lowest realistic barrier to entry. The cost is the mortgage insurance premium, and its terms are worse than they look: there is an upfront premium of 1.75% of the loan, and on any FHA loan with less than 10% down the annual premium runs for the entire life of the loan. It does not fall away at 78%. Refinancing out of it is the only exit, and that depends on rates you cannot predict.

VA loans, for eligible service members and veterans, require no down payment and charge no monthly mortgage insurance at all. There is a one-off funding fee, which can be rolled into the loan and is waived for veterans receiving disability compensation. If you are eligible, this is almost always the cheapest way to buy a house at this price.

One more thing to check at $700,000: whether the loan is conforming. Loans above the limit set each year by the Federal Housing Finance Agency are jumbo loans, which usually means stricter income and reserve requirements and a larger deposit. The baseline limit was $806,500 for 2025, and it is higher in designated high-cost counties, so a loan of $560,000 to $665,000 sits comfortably underneath in most of the country. The figure resets annually, so check the current one for your county rather than relying on this paragraph.

What to do when the answer is no

When the calculator says a lender will not approve this, it also says exactly what would change that: how much more income, how much larger a deposit, and what interest rate clears it. Each one is solved on its own, with the others held still, because that is how you would actually act on it. They are alternatives rather than a list.

Which of them is worth pursuing depends on which you can move.

A larger deposit is the one most people can influence, and it does more than shrink the loan. Crossing 20% removes the mortgage insurance entirely, which is a step rather than a slope: the last few thousand dollars that take you over that line are worth far more than the first few thousand. If the calculator says you are close to it, that is the cheapest gap on the page to close.

Waiting for rates is real but it is not a plan, because nobody can tell you when. What it is useful for is calibration. If the rate that clears the gap is a point and a half below today's, that is a long wait. If it is a quarter point, the answer may be closer than it feels.

Paying down other debt is missing from the three levers, and it is often the fastest of all. The 36% limit counts the payment, not the balance, so clearing a car loan with a $450 monthly payment frees $450 of allowance immediately. On a marginal application that can matter more than tens of thousands of dollars of deposit.

Buying less house is the option nobody lists and everybody should consider. Change the price in the calculator before you change anything else. A $625,000 house is not a defeat, and the difference between it and this one is roughly the entire gap most people are trying to close by other means.

How this is calculated

Every assumption, in one place. Each is an input in the calculator above, so disagreeing with any of them takes one edit rather than a different website.

• Interest rate: 6.7%, the Freddie Mac survey average for a 30-year fixed loan. Rates move weekly and this figure is updated by hand rather than pulled from a live feed, so treat it as a starting point and check it against a current quote before relying on it.
• Lender limits: 28% and 36% of gross monthly income, the tighter of the two applying. Housing alone under 28%, housing plus all other debt under 36%.
• Property tax 1.1% and home insurance 0.35% of value a year, both national averages, and both worth $642 and $204 a month here. Both vary enormously by state and by county, and both are inputs.
• Maintenance 1% of value a year, which is $583 a month. A rule of thumb, not a bill. Older houses run higher and newer ones lower, and it is an average across years rather than a monthly invoice.
• Mortgage insurance 0.75% of the loan a year when the deposit is under 20%, ending automatically at 78% of the original value under the Homeowners Protection Act.
• Closing costs 3% of the price, which is $21,000 here. The usual range is 2% to 6%.
• Reserve floor: 3 months of the full housing cost, measured against savings after both the deposit and the closing costs have been paid.
• Income is gross, and so is what is left. The 28/36 rule is written against pre-tax income, so this follows it. That means income tax has to go in the other monthly spending field, or the leftover figure will flatter you by whatever you actually pay. The worked case above puts $4,550 a month there for exactly this reason.

What is not modelled: rate changes on an adjustable loan, the mortgage interest deduction, mortgage insurance cancelled early by a new appraisal, and state or local first-time buyer programs. Each would move the answer, and none of them move it in a way a national average can predict for you.

Frequently asked questions

What salary do I need for a $700,000 house?

About $191,000 a year with 20% down, $500 a month of other debt and a thirty-year fixed loan at 6.7%. That is what the 28/36 rule requires, which is what a lender checks. It is not the same as what the house costs to run, which is $5,043 a month once upkeep is counted.

Do I really need 20% down?

No. You need 20% to avoid mortgage insurance, which is a different question. Below it a lender adds a premium of roughly $394 a month at 10% down on this house, for a little over nine years. Twenty percent down also cuts the income a lender wants from about $227,000 to about $191,000.

How long does PMI last on a $700,000 house?

A little over nine years with 10% down, and about eleven and a half years with 5%, at 6.7% over thirty years. It ends automatically once the balance reaches 78% of the original value, and you can request cancellation at 80%. Paying extra toward the principal brings both dates forward. Note that this applies to conventional loans; FHA mortgage insurance works differently and usually does not end at all.

Why include maintenance when my lender does not?

Because the money leaves your account either way. At 1% of value a year, which is the common rule of thumb, upkeep on this house is $583 a month. That is more than the property tax line every lender itemises carefully. A lender leaves it out because it is not a debt owed to the lender, which is a good reason for them and a bad one for you.

How much cash do I need in total?

The deposit, plus closing costs of 2% to 6% of the price, plus a reserve. Three months of the full housing cost is the floor used here, which is $15,128 on this house, and six months is better. On a $700,000 purchase with 20% down that is roughly $175,000 to $185,000 of cash before moving costs and furniture.

Is the 28/36 rule a legal requirement?

No. It is a widely used convention. Government-backed programs often allow higher ratios, and lenders vary in how strictly they apply it. The ceiling being higher than 36% is not a reason to aim for it.

Is this a mortgage pre-approval?

No. It is a planning estimate based on the numbers you enter. A lender will also weigh your credit history, employment, assets and its own underwriting rules, any of which can move the answer in either direction.