Thinking of buying a $500,000 home? 🏡 It’s a big financial milestone—and an exciting one! But how much income do you really need to comfortably afford a home at this price?
Let’s break it down with real numbers, expert rules of thumb, and a calculator so you can estimate what’s right for your financial situation.
Table of Contents
🧮 Home Affordability Calculator
👉 Use the calculator below to see how much income you’d need based on your own monthly budget.
Can You Afford a $500K Home?
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💰 Quick Answer
To afford a $500,000 house, you should ideally earn at least $120,000 to $140,000 per year, depending on:
- Your down payment
- Your monthly debts
- Property taxes and insurance
- Mortgage interest rates
- Loan term (15 vs. 30 years)
But don’t worry—we’ll go deeper into the math below 👇
🧮 The 28/36 Rule (Industry Standard)
This is a commonly used rule to determine affordability:
- 28% of your gross income should go toward your housing expenses (mortgage, taxes, insurance)
- 36% of your gross income should cover all debt (housing + car loans, credit cards, etc.)
Example:
If you want to spend no more than 28% of your income on housing:
$500,000 home → $3,200/mo mortgage (estimate with taxes & insurance)
$3,200 ÷ 0.28 = $11,429/month income
$11,429 × 12 = $137,148/year
🎯 Target income: $135,000+ annually
🔢 Breakdown of Monthly Costs for a $500K Home
Here’s what you might pay monthly (assuming a 10% down payment and 7% interest):
| Expense | Amount |
|---|---|
| Mortgage Payment | $2,994 |
| Property Taxes (1.2%) | $500 |
| Home Insurance | $125 |
| PMI (Private Mortgage Insurance) | $150 |
| Total Monthly | ~$3,770 |
💵 How Your Down Payment Changes Things
| Down Payment | Loan Amount | Impact |
|---|---|---|
| 5% ($25K) | $475K | Higher monthly payment + PMI |
| 10% ($50K) | $450K | Lower PMI, lower monthly cost |
| 20% ($100K) | $400K | No PMI, better rate, cheaper overall |
💡 The more you put down, the less you pay monthly—and the more lenders love you!
🛠️ Other Costs to Consider
- HOA fees (if applicable)
- Utilities & maintenance
- Closing costs (2%–5% of home price)
- Emergency savings for repairs
📌 Final Thoughts
To afford a $500,000 house, aim for an income of $120K–$140K+ per year, depending on your debt, down payment, and spending habits. But remember: affordability isn’t just about what the bank approves—it’s about what fits your lifestyle and long-term goals.