How to afford a $1 million home: Key factors and tips

What you'll learn

— Typical income to buy a $1 million home

— Factors that impact affordability

— Additional costs and requirements

— Monthly payment breakdown

— Strategies to afford a $1 million house

A $1 million home is a big financial commitment, about three times higher than the average price tag. If your dream home is in this price range, you'll need to start by understanding how to afford one. Thankfully, you don’t need to be a millionaire to do it — you just need the right strategies and salary.

Discover how to afford a million dollar home and which factors impact affordability. Plus, see a monthly payment breakdown to plan your budget.

What income do I need to buy a million-dollar home?

You’ll need a steady six-figure salary to afford a $1 million home, but the exact amount varies. Home affordability isn’t just based on income — it also depends on your monthly expenses, credit history, and down payment size.

Two buyers with the same income won’t necessarily qualify for the same home. One may have lower monthly expenses, while the other is covering medical expenses or child care. Lenders weigh those differences when deciding who can afford the property.

Factors that affect how much house you can afford

Here are a few factors lenders look at to gauge a borrower’s buying power and reliability. 

Down payment

Larger down payments lower the amount you need to borrow, reducing monthly costs. To avoid private mortgage insurance (PMI), people often try to put at least 20% down. But some borrowers opt for more to shrink long-term costs. For example, 30% down on a $1 million home drops the loan to $700,000 and results in a much lower monthly payment on your mortgage.

Credit score

A higher credit score shows lenders you manage your finances well. This can result in better interest rates, increased borrowing amounts, and more mortgage options. 

Debt-to-income ratio

Lenders look at your debt-to-income (DTI) ratio to see how much room you have in your budget for a mortgage. Providers typically compare your gross monthly income to debts like student loans and credit card bills to see how much money you put toward other expenses. Most lenders want to see a DTI ratio of around 36%. But at Better, we accept a maximum of 50% for conventional loans.

...in as little as 3 minutes – no credit impact

Interest rate

Interest rates make a difference. Even a 1% increase can change monthly payments by a few hundred dollars. Many factors impact interest, from your financial profile to market conditions. To see how rates, loan types, and terms compare, you can look up local mortgage rates by zip code through Better.

Property taxes

Taxes vary significantly by region. They’re based on how each area assesses property values, which can lead to thousands of dollars more annually in ownership costs. Check comp sales in your desired area to see what you’d be on the hook for before committing.

Homeowners insurance

Insurance premiums are based on location, property value, and the coverage the homeowner chooses. For example, older homes may cost more to insure because they may need updates or repairs. Check out different providers to find the best rates before committing.

HOA fees

It’s common to find a $1 million dollar home within managed communities. Often, they charge monthly or annual HOA fees to cover upkeep and shared amenities. Weigh the HOA’s benefits and cost to decide if it’s worth the increased monthly payments.

How to afford a million dollar home: Top requirements ✅

There’s more to affording a $1 million home than the sticker price. Here are a few additional costs and requirements to keep in mind.

Closing costs

This covers fees like appraisal and title services, which usually add up to 2–5% of the loan amount. On a $1 million home, that can mean $20,000 to $50,000 in up-front expenses. 

Cash reserves

For higher-priced homes, lenders like to see a few months of mortgage payments saved up as a cushion. For a $1 million property, this could exceed $40,000. 

Proof of stable income

Buyers will need to show steady income through documents like W-2 forms and tax returns. Because of the loan size, lenders may ask for more in-depth financial information and conduct manual underwriting. Higher loans are a bigger risk for mortgage providers, so they typically prefer a stricter verification process.

Monthly payment breakdown on a $1 million home

Details like down payments and credit scores significantly impact monthly costs — here’s how. 

Down payment

A large down payment on a $1 million home can lower the monthly payment and remove PMI, reducing your final payoff amount.

The following examples show how different down payments affect monthly costs:

— 20% down payment: A borrower finances $800,000 with an estimated payment of $5,697 per month.

— 10% down payment: A buyer takes out a loan of $900,000. Because the loan is bigger and includes PMI, the monthly payment rises to about $6,737. 

These calculations are based on a 30-year, fixed-rate mortgage at an interest rate of approximately 7%. If your loan type and terms are different, use Better’s online calculator to estimate your payments and start planning your budget.

Credit score

Credit scores play a major part in how lenders determine interest rates. Here’s how credit scores change monthly costs on a standard, 30-year mortgage:

— 620–680: Scores in this range often come with interest rates around 7.8%. For an $800,000 loan, monthly payments would be about $5,780.

— 680–760: Typically, this score range qualifies for an interest rate closer to 7.5%, which would put costs at about $5,596.

— 760+: Higher credit scores secure rates around 7.25%, lowering payments to roughly $5,454.

Additional costs when buying a house

Homeownership comes with expenses beyond the mortgage itself. Here are a few to plan for:

— Maintenance: Routine upkeep on seven-figure homes can get pricey. For example, it can be an expensive, recurring cost to hire landscaping professionals to tend the grounds.

— Repairs: These properties may require special materials and higher-cost labor. For instance, replacing a marble countertop is pricier than granite.

— Utilities: Energy and water costs often increase with a home’s size and location.

Strategies to afford a $1 million home

There are a number of ways buyers can improve affordability when exploring how to purchase a $1 million home. Here are a few tips.

Take out a jumbo loan

With these loans, you can borrow more than the standard limits set by Fannie Mae and Freddie Mac, the government-backed institutions that support most U.S. mortgages. Jumbo loans typically require stronger credit and a larger down payment but help buyers purchase high-value homes without cash-only offers.

Apply with a co-borrower

Applying jointly with another qualified borrower can increase your total approved income. It can also help lower your combined DTI. This improves your overall financial profile, helping you qualify for a larger loan than you could on your own.

Increase the down payment

Contributing more up front lowers both the interest and size of the loan, which means a larger share of each monthly payment goes toward the principal. This improves long-term affordability and helps you grow equity in the property faster.

Making a $1 million home possible

A $1 million home may sound grand, but the right plans can make it possible. The process requires a clear understanding of income, debt, and additional costs. It also helps to work with a lender that has experience with high-value loans, and with Better, you’ll have support and expert-backed advice the entire way.

Better’s digital platform is built to simplify the home buying journey. Get pre-approved in as little as three minutes, and view personalized loan estimates with transparent, flexible terms. You can quickly compare competitive rates and access customer support from a convenient dashboard, making the buying process smooth and stress-free.

Confidently go from approval to closing with Better. 🏠

...in as little as 3 minutes – no credit impact

FAQ

What are the ways to afford a million-dollar home?

There are several ways to make a million-dollar home affordable, like improving your credit score, saving for a bigger down payment, and applying with a co-borrower to raise your total qualifying income. Some buyers explore jumbo loans, which help people secure high-value homes without a cash-only offer.

How much is a down payment on a $1 million house?

Borrowers might put down between $50,000 and $200,000 on a $1 million house. That’s roughly 3–20%, though some buyers put more down to reduce long-term costs.