What Salary Is Needed for a $700K House? (2024)

Depending on where you live, a $700,000 house may be a mini-mansion with five bedrooms, three bathrooms and two half-bathrooms or a modest split-level home with three bedrooms and two bathrooms. The unifying factor between either model is the fact that you’ll need the money to put up to sign on your mortgage and walk away with a keyset.

Not sure where to start? You can typically get a sense of how much income you need to afford a $700,000 house by following what’s known as the 28/36 rule. This rule suggests spending no more than 28% of your gross monthly income on housing, and no more than 36% on all debts (including housing). Once you do the math, you should be able to gain some clarity about the income you’d need to afford a $700K home.

Read on to learn more about the income needed for a $700K mortgage.

Vault’s Viewpoint

• The income you need to afford a $700K house depends a lot on where you live.
• If you’re looking to buy, a good rule of thumb is to limit spending on housing to no more than 28% of your gross monthly income.
• A mortgage lender wil generally want you to have a debt-to-income ratio no higher than 43%.

Income Needed for a $700K Mortgage

The salary needed to afford a $700,000 home largely depends on where you live.

For example, the median household income in the San Francisco area stood at $136,689 in 2022, according to the U.S. Census Bureau. Across the country in Florida’s Tampa-St. Petersburg metro area, the median household income was far less—$69,290. Therefore, a household in the San Francisco area should presumably be able to more easily afford a $700,000 home than someone in the Tampa-St. Petersburg area.

However, several other factors come into play when determining the income needed to afford a $700,000 home, such as how much debt you’re associated with and how much your monthly household expenses are.

That’s why our experts recommend referencing the 28/36 rule mentioned above. Here’s how the rule would apply to a couple earning $130,000 a year.

Dividing the $130,000 income figure by 12, you come up with $10,833 per month. Multiply this by 0.28 to get 28%, and you arrive at $3,033 per month. That’s how much, under the 28/36 rule, this couple should be spending on housing each month.

Next, multiply the monthly income by 0.36 to come up with 36%. Here, you wind up with a total of $3,890. This is the amount they should set aside each month for total debt payments on average, including housing.

So, let’s say this couple takes out a 30-year, fixed-rate mortgage at 7% for a $700,000 house, and makes a down payment of $140,000. Not taking into account taxes and insurance, their monthly mortgage payment on $700K would be approximately $3,726. Under the 28/36 rule, this amount exceeds what the couple pulling in $130,000 a year should be spending each month on housing and comes close to what they should be setting aside each month for all debt payments.

The final verdict: This couple would be straining their budget to afford a $700,000 home.

Where Can You Find a $700K Home?

You should be able to find a home with a median sale price of $700,000 or less in most metro areas in the U.S.

Data for the fourth quarter of 2023 published by the National Association of Realtors found just 14 metro areas where the median sale price for an existing single-family home exceeded $700,000. The list featured eight metros in California, including San Jose, San Francisco and San Diego. In San Jose, for example, the median home price was almost $1.77 million.

The remaining metro areas fell below the $700,000 mark. In the Denver, Colorado, area, for instance, you could have purchased a home at a median price of $661,000. By comparison, the median price was $405,000 in Tampa-St. Petersburg, Florida. Lastly, in St. Louis, Missouri, the median sale price sat at a more manageable $254,400.

At the bottom of the Realtors’ list was Decatur, Illinois, where the median sale price for a home was just $126,000. So, it appears you could buy a rather grand home in Decatur for $700,000.

No matter where you are, though, housing affordability likely nags you. Real estate platform Zillow reported in February 2024 that the average U.S. household needed to earn roughly $106,000 to “comfortably” afford a typical home. That amount is $25,000 above the typical U.S. household income cited by Zillow—about $81,000.

How To Qualify for a $700K Home

We know there’s likely a standout question on our readers’ minds: “How much income is needed for a 700k house?”

Not every lender uses the same standards for mortgage qualification, whether you’re buying a $70,000 home, a $700,000 home or a $7 million home.

Thankfully, you don’t have to start the process blindly. Below, our experts have summarized what you’ll likely have to provide when working through mortgage qualification for a $700,000 home.

• A review of your credit. Aside from examining the payment history on your credit report, a lender will look at your credit score. Typically, the higher your score, the greater the chances you’ll qualify for a mortgage. For a conventional (non-government) loan, you’ll generally want a credit score of at least 620.
• A summary of your income. A key factor that contributes to your lender’s approval or denial decision is your debt-to-income ratio. Calculating this ratio is simple: Simply add up your monthly debts and divide that value by your gross (pre-tax) monthly income. Generally, experts suggest that you have a debt-to-income ratio of 43% or less if you plan to apply and qualify for a mortgage.
• A review of your assets. Your lender will likely ask for a summary of your assets to evaluate the information and ensure you’ll be able to make timely mortgage payments on $700K or provide collateral in the event you cannot do so. These assets may include checking accounts, savings accounts, retirement accounts, certificates of deposit (CDs), cars, RVs, jewelry, artwork and antiques.
• A long-standing record of employment. A mortgage lender ideally wants to see a steady employment track record spanning at least two years. This may seem simple, however, it does offer your lender confidence that you’ll be able to pay the loan over time and that you have a steady flow of income.