What income is needed to afford a $1.5 million house?

Core Insights - The article discusses the income requirements necessary to afford a $1.5 million home, emphasizing the importance of evaluating income before starting the home-buying process [1] Mortgage Costs - A $1.5 million mortgage typically requires a jumbo loan, which is not backed by government agencies and exceeds conventional loan limits [2] - Jumbo loans are harder to qualify for and usually come with higher interest rates due to the increased risk for lenders [3] Monthly Payment and Down Payment - Monthly payments for a $1.5 million home can vary, with down payments ranging from 10% to 30% of the purchase price [4] - Closing costs for jumbo loans are generally higher, totaling 2% to 5% of the home's purchase price [5] Income Requirements - According to the 28/36 rule, a monthly pretax income of at least $28,771 (approximately $345,257 annually) is needed to afford the mortgage for a $1.5 million home [7][8] - The 25% rule suggests a required monthly post-tax income of around $32,224 (approximately $386,592 annually) based on the same estimated monthly payment [9][11] - The 35/45 rule indicates a need for a monthly pretax income of about $23,017 (approximately $276,206 annually) to afford the mortgage [12][18] Ongoing Homeownership Costs - Homeownership entails additional costs, with experts recommending budgeting 1% to 4% of the home's purchase price for annual maintenance, translating to $15,000 to $60,000 per year for a $1.5 million home [14] - Property tax and homeowners insurance costs may increase over time, impacting overall affordability [14] FAQs on Income Requirements - To afford a $1.5 million home, an annual pretax income of $276,206 to $345,250 is necessary, assuming a 20% down payment [15]