Income needed for 700k mortgage: Tips and scenarios

Home buyers who earn between $185,000 to $235,000 a year should be able to afford a $700,000 home.

But that's not a guarantee. Other factors, including down payment size, interest rates, HOA fees, and the buyer's existing debt, affect the income needed for a $700k mortgage. 

Here's what you need to know. 

Income required for $700k mortgage

To determine the ideal salary to afford a $700k house, the 28/36 rule can be a great starting point. According to the 28/36 rule, which is a guideline commonly used by mortgage lenders: 

– No more than 28% of your gross monthly income should be spent on monthly housing costs.

– No more than 36% of your gross monthly income should go toward debt payment (housing, credit cards, student loans, car loans, etc.).

With these income percentage guidelines in mind, assuming your estimated monthly housing costs are $4,300, you'd need to earn an income of around $185,000 to afford a $700k house comfortably. 

This estimate assumes the borrower has excellent credit and makes a 20 percent down payment. Some buyers may need an income of around $235,000 to qualify for a mortgage in this price range. 

The income required for a $700k mortgage can vary significantly based on factors such as credit score, outstanding debts, down payment amount, interest rates, and location. 

To help gauge affordability, you can use a calculator to estimate your monthly mortgage payments. Getting pre-approved for a mortgage can also help you establish a realistic budget. 

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Factors that determine your home affordability

Your income plays a significant part in how much home you can afford. But other factors also affect home affordability. 

Here are a few: 

– Down payment amount. Your down payment amount can impact the income required for a $700k mortgage. By making a larger down payment, you'll need to borrow less, which could improve affordability for a $700k house.  

– Debt-to-income (DTI) ratio. Lenders look at your DTI ratio to determine whether to approve you for a mortgage. 

– Interest rates. The interest rate on your mortgage will affect your monthly payment. A higher interest rate increases your monthly payment amount, while a lower interest rate decreases it. Review today’s mortgage rates. 

– Loan type: The type of mortgage you apply for can also impact home affordability. For example, FHA loans help buyers qualify with lower credit scores and higher maximum DTI ratios. But they have upfront and monthly mortgage insurance premium costs. Additionally, maximum FHA loan limits exist and vary by location. 

– Location costs. The annual income needed to buy a home in this price range can also vary depending on where you live. In some parts of the country, homeowners insurance and property tax costs can be significantly higher than in areas with a lower cost of living. 

– Other financial obligations. Lenders consider your other financial obligations, including student loans, car loans, and credit cards, when deciding whether you can afford to make your mortgage payments. These expenses can affect your monthly debt payments and the income you need to purchase a $700k house. 

Related: FHA loans vs conventional loans 

Scenarios for buying a $700K house

So, what is the income needed for a 700k mortgage? Here are three scenarios to illustrate how income requirements can vary depending on a borrower's financial situation and loan terms. 

Scenario 1:

–Down Payment: $140,000 (20%)
–Loan amount: $560,000
–Credit Score: 780
–30-year fixed mortgage interest rate: 5.75%
–Existing monthly debts: $560
–Monthly Mortgage Payment (Principal and Interest): $3,268
Estimated Taxes and Insurance: $1,038
–Total Monthly Housing Cost: $4,306

Income Needed: $185,000 

Scenario 2:

–Down Payment: $70,000 (10%)
–Loan amount: $630,000
–Credit Score: 730
–30-year fixed mortgage interest rate: 5.90%
–Existing monthly debts: $1,200
–Monthly Mortgage Payment (Principal and Interest): $3,737
Estimated Taxes and Insurance: $1,038
–Total Monthly Housing Cost: $5,185 (includes PMI) 

Income Needed: $223,000

Scenario 3:

–Down Payment: $35,000 (5%)
–Loan amount: $665,000
–Credit Score: 740
–30-year fixed mortgage interest rate: 6.120%
–Existing monthly debts: $800
–Monthly Mortgage Payment (Principal and Interest): $4,038
–Estimated Taxes and Insurance: $1,038
–Total Monthly Housing Cost: $5,495 (includes PMI) 

Income Needed: $236,000

The incomes above enable the buyers to be within the 28/36 rule thresholds. 

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Buying a $700K home with no down payment

Some mortgage programs allow borrowers to purchase a home with no down payment. However, you must meet eligibility requirements. 

An example is VA loans. With a VA loan, qualified military service members, veterans, and surviving spouses can purchase a home with no down payment.  But even if you qualify for a no-down-payment home loan, it may not be the best money move. 

Making a down payment will reduce the amount of money you have to borrow to buy a $700k house and reduce your monthly mortgage payments. If you make no down payment, your monthly payments can be expensive. 

Buying a $700K home with a small down payment

To avoid paying PMI, experts recommend making a 20% down payment. But if you plan to make a 20% down payment for a $700k house, you’ll need to have $140k saved before you close. That’s a lot of money to have stashed away. 

If you're hoping to finance your home with a conventional loan, be sure to review the minimum down payment requirements. If you can only afford a small down payment, you may still be able to get approved for a mortgage to buy a home. Some conventional loans allow qualified borrowers to put as little as 3% down. 

But remember, most home loan programs require borrowers who put down less than 20% to pay PMI, which will increase your monthly payment amount. If you can swing a larger down payment, you'll reduce your overall borrowing costs. 

Tips to afford a $700K mortgage

– Improve your credit score. Taking steps to improve your credit score could help you qualify for a home loan with a lower interest rate. Getting approved for a mortgage with better terms can make a $700k mortgage more affordable. 

– Reduce your debt. Paying down your debt could help you lower your DTI ratio. This could help you expand your mortgage options and qualify for a home loan with a lower rate. 

– Shop lenders. It can be beneficial to gather home loan quotes from multiple lenders to find the best loan for your situation. Be sure to compare all lending costs. 

– Choose the right lender. Working with a lender that offers a lower rate can help to make your monthly payments more affordable. Better offers a full range of loan types and a fully online application process. 

– Save up for a bigger down payment. The bigger the down payment you make, the less you'll need to borrow when taking out a home loan. A larger down payment may also improve your chances of getting approved for a $700k mortgage.   

– Take time to change your financial situation. If you're not in a hurry to buy a home, it may be beneficial to improve your finances first. Getting a higher-paying job could help to increase income. Another way to set yourself up for success is to look for ways to reduce your monthly expenses. 

What if I don’t meet the requirements for a conventional mortgage loan?

For those who don't qualify for a conventional home loan, alternative mortgage programs exist. For example, VA loans are available to eligible military members, veterans, and their surviving spouses. 

For those looking to buy a more expensive home, a jumbo loan is an option to explore. Jumbo loans enable buyers to borrow more than what's allowed for standard conforming mortgages.

For 2025, the conforming loan limit in most parts of the country is $806,500. So if you're considering purchasing a home well above $800k, a jumbo loan may be a good fit. However, you should expect to put down at least a 20% down payment with this type of loan. 

Income needed for a $700k mortgage FAQs

Here are some answers to commonly asked questions about the income required for a $700k mortgage:

Is a $200K salary enough for a $700K mortgage?

The income needed to afford a $700k mortgage can vary depending on your down payment, credit score, DTI ratio, and loan interest rate. It's possible to buy a 700k house with a $200k salary. Locking in a low interest rate and making a down payment of at least 20% can help. 

What are the monthly payments on a $700K mortgage?

For a fixed-rate 30-year mortgage at 5.75% with a 20% down payment, the monthly mortgage payment would be $3,268. This only includes principal and interest costs, not homeowners insurance or property taxes. These expenses will increase your monthly mortgage payment amount, but the costs vary.

What are other costs to consider besides mortgage payments?

It's beneficial to consider what other costs you'll be responsible for when buying a $700k house. You should budget for closing costs, which typically range from 2% to 6% of the loan amount. You should also consider utility costs and home maintenance and repair expenses. If you want to buy a home in a community with an HOA, you should also consider whether the HOA fees are affordable and match the services provided. 

The right lender can make a difference

To comfortably afford a $700k house, you'll likely need an annual income between $185,000 and $235,000. However, the required income for a home loan of this amount will vary depending on your individual financial situation and the terms of your home loan. 

Better is a digital lender offering online pre-approvals and competitive jumbo, VA, and FHA loan options that can help qualified buyers reach a $700K home budget.

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