How Much Income Is Needed for a $1,000,000 Mortgage?

By Alene Laney · June 03, 2024 · 12 minute read

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How Much Income Is Needed for a $1,000,000 Mortgage?

If you need a $1 million mortgage to buy a house in your area, you want to feel secure that you have the income needed to make your payments, which is about $300,000 per year. Financing a $1 million dollar mortgage means a monthly payment of around $9,000, assuming you have a mortgage interest rate of 7%. (This number includes an estimate by Fannie Mae for the principal amount, interest, taxes, insurance, and HOA fees.)

If your lender follows the conservative 28/36 rule where the maximum amount of household debt you can have is 36% of your gross pay, then the monthly mortgage payment ($9,000) needs to be 36% of your monthly income. $9,000 is 36% of a $25,000 monthly income, or $300,000 per year.

If you’re not quite there or wondering how this number changes with other debt and income levels, we have you covered. We’ll go through everything you need to know about the income you’ll need for a $1 million dollar mortgage.

Income Needed for a $1,000,000 Mortgage

The income you need for a $1,000,000 mortgage depends on how much debt you’re carrying and the amount of your down payment. These two factors affect your monthly payment, which in turn determines how much you’ll need to earn to qualify for the mortgage.

For example, as noted above, a $1,000,000 mortgage works out to about a $9,000 monthly payment including payment, interest, taxes, and insurance on a 7% annual percentage rate (APR). Without debt, you need to make about $300,000 per year to afford the payment.

How debt affects your $1 million mortgage: If you have $1,000 in additional debt you’re carrying each month, you’ll need more income to qualify for the loan.

$9,000 mortgage + $1,000 additional debts = $10,000 in total monthly debts
$10,000 is 36% of $27,778 per month, or $333,336 per year.

In other words, if you have $1,000 in debt and need to qualify for a $1,000,000 mortgage, you’ll need to earn $333,336 per year.

How a down payment affects a $1 million mortgage: A down payment also has an effect on the income you need for a $1 million dollar mortgage. If your down payment is only 10%, your mortgage amount increases because you’ll need to pay a mortgage insurance premium (MIP) on top of your monthly payment. For a mortgage of this size, your monthly payment increases $367 per month.

For the most accurate numbers, try using a mortgage calculator with taxes and insurance.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


How Much Do You Need to Make to Get a $1 Million Mortgage

To get a $1 million dollar mortgage, the amount of income you would need is right around $300,000. To arrive at this number, we followed the 28/36 ratio, and assumed a 7% APR, which is close to market rates in 2024. With taxes, insurance, and PMI, your monthly payment will be close to $9,000. Assuming you have no debt, you would need to make $25,000 each month, or $300,000 each year to qualify for the monthly payment on a million-dollar home.

What Is a Good Debt-to-Income Ratio?

A good debt-to-income ratio is as low as you can get it. Lenders love seeing debt levels below 35%. If you have a minimal amount of debt (student loans, credit card debt, car loans, etc.) you may be able to qualify for a bigger loan or better rates. If you have a lot of debt, the amount of mortgage you’ll qualify for will be significantly less. Remember that if you aren’t happy with your mortgage rate you can always consider a mortgage refinance down the line.

What Determines How Much House You Can Afford?

A million-dollar mortgage seems like such a high mark, but if you’re in a high-cost-of-living area, it’s the norm. Qualifying for a mortgage that high involves a look at the following factors:

•   Income Lenders love seeing reliable income and employment history to ensure that you’ll pay the mortgage back.

•   Down payment A higher down payment enables you to look for a higher-priced home. A down payment of 20% or more also allows you to avoid mortgage insurance, which is a payment you’re required to make every month if you have less than 20% equity.

•   Credit history If your credit history is patchy, the lender may hesitate to lend you money, even if you can qualify with your income. A lower credit score means you’ll get a higher interest rate, which translates into a lower mortgage amount.

•   Debt level If your debt is too high, you may not qualify for a $1 million dollar mortgage. Lenders look for a debt-to-income (DTI) ratio of 45% at maximum (and usually lower).

You’ll also likely need a jumbo loan, also called a non-conforming loan, which usually has more stringent requirements.

It may be best to take a look at a mortgage calculator or talk to a lender to take your individual situation into account to get the most accurate number.

What Mortgage Lenders Look For

For the $1 million dollar mortgage, you’ll want to get your finances in tip top shape. Lenders look at a few factors to get you qualified for that price tag.

•   Cash reserves When you’re looking at a million-dollar mortgage with a jumbo loan, the lender is also going to want to see how much money you have in the bank. Cash reserves are more important for a million-dollar mortgage than they are for lower mortgages.

•   Strong credit Your credit score should be in the 700 range if you’re looking for a $1 million dollar mortgage.

•   Appropriate debt You should also have low levels of debt. As mentioned previously, an appropriate DTI ratio is less than 45%.

$1,000,000 Mortgage Breakdown Examples

To help illustrate the income needed for a $1 million mortgage, we’ve put together a few examples with different scenarios using a mortgage calculator. All assume a home purchase price of $1,250,000 and a down payment of 20%, or $250,000. Keep in mind the taxes and insurance numbers may not reflect your area as some states have a higher cost of living than others — and even within a given state, some places are more affordable.

30-Year Loan at 6% Fixed Interest Rate

Total Payment: $8,079
Principal and Interest: $5,996
Other Costs (homeowners insurance and property taxes): $2,083

15-Year Loan at 6% Fixed Interest Rate

Total Payment: $10,522
Principal and Interest: $8,439
Other Costs (homeowners insurance and property taxes): $2,083

30-Year Loan at 7% Fixed Interest Rate

Total Payment: $8,736
Principal and Interest: $6,653
Other Costs (homeowners insurance and property taxes): $2,083

15-Year Loan at 7% Fixed Interest Rate

Total Payment: $11,071
Principal and Interest: $8,988
Other Costs (homeowners insurance and property taxes): $2,083

Recommended: Home Loan Help Center

Pros and Cons of a $1,000,000 Mortgage

When comparing the different types of mortgage loans, there are some benefits and drawbacks to a higher-priced mortgage.

Pros

•   Able to purchase a nice home in most U.S. markets

•   Tax savings on mortgage interest up to the $750,000 mortgage limit

Cons

•   Harder to qualify for

•   May come with higher interest costs

•   High monthly payment

•   Cost of maintaining home may be steep

How Much Will You Need for a Down Payment?

In an ideal world, a 20% down payment on a mortgage loan allows you to get the most bang for your buck. You avoid PMI, which is very costly on a million-dollar home. With few exceptions, you’ll likely need at least 10% to qualify for a million-dollar mortgage.

Can You Buy a $1 Million Home With No Money Down?

There are very rare instances where you can buy a $1 million home with no money down. Some of these may include:

•   Your loan is privately funded

•   You qualify for a VA loan (from the U.S. Department of Veterans Affairs) and live in Hawaii (or another exceptionally high cost area)

Can You Buy a $1 Million Home With a Small Down Payment?

If you’re looking to buy a $1 million home with a small down payment, generally, you’re out of luck. Most lenders look for at least a 10% down payment (and usually more). But there are a few scenarios where it makes sense to look for a million-dollar home with a small down payment.

High-cost-of-living areas If you live in an area that’s defined by the FHFA (Federal Housing Finance Agency) as a high-cost area, you may be able to get a million-dollar mortgage with a small down payment if it falls under the conforming loan requirements.

One of these requirements is the loan limit amount. The FHFA sets the conforming loan limit for mortgages, which is the maximum loan amount it will guarantee. In high-cost-of-living areas, this amount is 150% of the conforming loan limit of $766,550, which works out to be $1,149,825.

So, even though the amount is over a million dollars, it’s still considered a conforming loan and will allow for conforming loan requirements, such as a 3% down payment.

VA Loan With a VA loan, you can qualify for a $0 down payment, and in high-cost-of-living areas, the loan limit may go up to $1,149,825.

Is a $1 Million Mortgage with No Down Payment a Good Idea?

As with all no-down-payment mortgages, your monthly payment will be higher — and the required mortgage insurance premium will drive it still higher. But even if you’re comfortable with those bigger numbers, it’s rare to find a lender that would be comfortable lending you a million dollars without a down payment. The exception? If you qualify for a VA loan and live in Hawaii, you might have a shot at a million-dollar mortgage with no down payment. If you’re wondering what size mortgage you can afford with the down payment amount you’ve set aside, consult a home affordability calculator.

Can’t Afford a $1 Million Mortgage?

If you can’t quite qualify for a $1 million mortgage, you can make plans to help you get there in the future. Here are a few tips to qualify for a mortgage.

Pay Off Debt

With less debt, you’ll qualify for a higher monthly mortgage payment. If you pay off a car and you no longer have a monthly payment of $500, for example, you may be able to qualify for a larger mortgage.

Look into First-Time Homebuyer Programs

First-time homebuyer programs can help with a range of tools, such as down payment assistance, lower interest rates, and lower housing prices. For example, in San Francisco, there are several options to help first-time homebuyers afford a home. If you qualify and if there is a property available, you can put your name in a lottery for a property to be sold below market value. These also may come with down payment assistance. There are also several programs that offer a loan up to $375,000 on properties in the city.

Most cities and states have some type of program to help first-time homebuyers. If you’re in a high-cost-of-living area and will have trouble qualifying for a million-dollar mortgage, a little research can help you find out what is available to get you into a home.

Cultivate Strong Credit

If credit history is your problem, it may take some time to build. Here are a few tips to help get you going.

•   Check your credit report. Pay attention to any negative marks and see if there are any errors that you can fix. Make sure your credit accounts are reported every month and call lenders if they haven’t been reported.

•   Consider opening a credit account. If you don’t have a credit account, take a look at secured credit cards or a credit-builder loan, which are easy to qualify for and can help you build up your credit in a hurry.

•   Automate your payments. Take the effort out of building your credit by setting your account to make a payment each month before the due date.

•   Ask for a credit limit increase. If you have a credit card, consider asking for a credit limit increase. The purpose of asking for a credit limit increase isn’t to use it, it’s to decrease the overall amount of your available credit that you are using.

Start Budgeting

Even on higher incomes, a budget can help you move toward your goal of saving for a down payment on a $1 million dollar mortgage. Put aside money every month or use your discretionary income to pay down debt.

Recommended: The Mortgage Preapproval Process

Alternatives to Conventional Mortgage Loans

If you’re looking for an alternative to a conventional mortgage, there are a handful of options to consider.

•   Private lending Private lenders can help accommodate unique needs for financing, such as a $1 million dollar mortgage. They usually charge higher interest rates, but have less stringent qualifications.

•   Seller financing Seller financing is where you make payments to the seller instead of a bank. There’s a legal contract involved that covers the purchase price, interest rate, term, home maintenance, and other details of the seller-financed mortgage.

•   Rent-to-own It may be possible to arrange for a rent-to-own deal with the seller. You’ll come up with the terms on your own, but the basic agreement allows you to rent the home for a period of time before purchasing it.

•   Borrow from your retirement account Though it’s not often recommended, it may be possible to borrow money from your retirement account for the purchase of a home. Be aware there are tax consequences and penalties if you aren’t able to repay the loan.

Mortgage Tips

At any income, you’ll want to choose the best mortgage possible. Here are a few tips to help you choose the right mortgage.

•   Shop around for a mortgage. You may have fewer options if your $1 million dollar mortgage doesn’t fall under conforming mortgage guidelines, but it’s still important to get firm quotes from multiple lenders.

•   Compare loan estimates. When you’re loan shopping, submit the same information to each lender and obtain a loan estimate. This standardized document can help you compare rates, fees, terms, and other details of the loan. You’ll be comparing “apples to apples” with the loan estimate.

•   Go with a reputable lender. You can check the lender’s rating on Trustpilot or the Better Business Bureau. Avoid a lender who misrepresents costs or wants to push you in the direction of one loan over another.

The Takeaway

Affording a $1 million mortgage does take a higher income. And even then, you’ll need to be prepared for stringent credit requirements, a substantial down payment requirement, and you’ll need to have cash reserves. There are very rare cases where you can get a $1 million mortgage with a low down payment, so you’ll want to plan to save for a down payment to make your house dreams a reality.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much is a $1 million mortgage over 10 years?

Assuming an interest rate of 7%, you would spend $1,393,301 to pay off a $1 million mortgage with a 10-year term.

What income should you have to buy a million-dollar home?

If you have no debt, a million-dollar home with a 7% interest rate and a 30-year term requires $240,000 to $300,000 in annual income. Exactly how much income you would need is determined in part by how large your down payment is and how much you need to borrow through a home mortgage loan.

How hard is it to get a million-dollar mortgage?

It is harder to get a million-dollar mortgage than a mortgage of a lower amount because you likely need to qualify for a jumbo loan, which requires a higher credit score, a larger down payment, and a large amount of cash reserves. These requirements are on top of the amount of income you need to qualify for a million-dollar mortgage.


Photo credit: iStock/kupicoo

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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