Buying a $700k home is a big milestone but how much do you really need to earn to afford it? While your down payment, credit score, and debt all play a role, the income needed for a $700k mortgage is the biggest factor in determining whether this house fits your budget.
Whether you’re planning to buy a house in Philadelphia, PA or a townhome in Chicago, IL, this Redfin guide will walk you through what to expect and how to prepare.
The short answer
- Most buyers need to earn $175,000 to $235,000 per year to afford a $700,000 home.
- This assumes average interest rates, a standard loan term, and a modest down payment.
- Your actual income needs may vary based on your debt, credit score, and monthly expenses.
What is the income needed for a $700k house?
A good starting point is the 28/36 rule, a common standard used by mortgage lenders:
- 28% rule: Your monthly housing costs (including mortgage, taxes, insurance) should be no more than 28% of your gross monthly income.
- 36% rule: Your total monthly debt (housing + credit cards, auto loans, student loans, etc.) should stay below 36% of your gross income.
For example, if your estimated monthly housing cost is $4,000, you’d need to earn around $175,000 per year to stay within these limits. That income requirement may be higher if you have additional debt or live in an area with high property taxes or insurance costs.
Calculator>> How Much House Can I Afford?
Sample Scenario: What $700k looks like in monthly costs
Let’s walk through a basic example.
- Home price: $700,000
- Down payment: 20% ($140,000)
- Loan amount: $630,000
- Interest rate: 7.00% (30-year fixed)
Estimated monthly mortgage payment (P&I): ~$3,726/month
Property taxes + homeowners insurance: ~$1,009
Total estimated monthly housing cost: ~$4,735
In this case, a buyer would likely need to earn around $203,000 annually to qualify comfortably. If they also had $1,000 in other monthly debts (credit cards, car loans, etc.), their required income would likely rise.
Keep in mind that putting down less than 20% often means adding private mortgage insurance (PMI), which bumps up your monthly payment and pushes the required income even higher.
Factors that impact how much house you can afford
The income needed for a $700k mortgage isn’t just about your salary. Here are six major factors that influence your affordability:
1. Down payment
A larger down payment lowers your loan amount, reduces your monthly payment, and can help you avoid PMI.
- 20% down avoids PMI and saves on interest
- 10% down means a higher monthly cost
- 3% down may work for first-time buyers but comes with added fees
2. Credit score
Higher scores usually unlock better interest rates, which can save you hundreds of dollars each month.
Read>> How To Buy A House With Bad Credit
3. Interest rate
Just a 1% difference in your mortgage rate can shift your monthly payment by hundreds. For a loan this size, it matters. For example, on a $700k home with 10% down:
- At 6.5%, your monthly payment might be $4,400
- At 7.5%, it could jump to $4,950
As of June 2025, the average 30-year fixed rate is around 7%, which is higher than rates seen in prior years.
4. Debt-to-income ratio (DTI)
Lenders look closely at how much of your income is already committed to other debts. A lower debt-to-income ratio (DTI) means more borrowing power.
5. Location-based costs
Property taxes and insurance vary by region and they’re included in your monthly housing costs.
For instance, the difference shown in the examples below could add hundreds to your monthly costs:
- In Westchester County, NY or Cook County, IL, annual property taxes on a $700k home could exceed $10,000
- In Maricopa County, AZ or Bexar County, TX, you might pay closer to $3,500 to $6,000
6. Ongoing obligations
Child support, alimony, and even HOA fees will be factored into your loan eligibility.
7. Financing
The loan type (whether conventional, FHA, VA, or another loan) you choose affects your rate, down payment, and monthly cost. Many states and cities offer down payment assistance or grant programs for first-time or income-qualified buyers, which can help reduce upfront expenses and make a $700k mortgage more attainable.
What it takes to afford a $700k home: Buyer scenarios
Let’s compare three different buyer profiles to see how variables like down payment, credit score, and debt affect income requirements:
| Buyer Profile | Down Payment | Credit Score | Rate | Debt | Monthly Payment (PITI) | Estimated Income |
|---|---|---|---|---|---|---|
| Conservative Buyer | 20% ($140,000) | Excellent (760+) | 6.75% | $300 | ~$4,641 | ~$199,000 |
| Typical Buyer | 10% (70,000) | Good (700-740) | 7.00% | $600 | ~$5,594 | ~$240,000 |
| Low Down Payment Buyer | 5% ($35,000) | Fair (660–680) | 7.25% | $1000 | ~$5,961 (incl. PMI) | ~$255,000 |
These numbers give you a ballpark idea, but your actual mortgage eligibility will depend on your specific financial picture.
Tips to help you afford a $700k mortgage
If the numbers feel just out of reach, these strategies can improve your odds:
- Boost your credit score: Lower interest rates mean lower payments.
- Pay down debt: Reducing your DTI expands your loan options.
- Increase your down payment: Even an extra 5% can make a big difference.
- Shop around for lenders: Rates, fees, and loan programs vary.
- Explore down payment assistance: Local programs might help bridge the gap, especially for first-time homebuyers.
- Add a co-borrower: A partner or spouse with income can help you qualify.
- Work with a real estate agent: An agent can help you stay on budget and negotiate better deals.
- Focus on savings: Building up your savings for a larger down payment can lower your monthly costs and make it easier to qualify for a $700k mortgage.
Read>> What You Need to Buy a House in 2025
FAQs: Your $700k mortgage questions answered
1. Can I afford a $700k mortgage on $150k income?
Probably not, unless your debts are very low and you have a sizable down payment. Most buyers need closer to $170k-$200k annually.
2. What if my credit score is under 700?
You can still qualify, but you may face higher rates, which will raise your required income.
3. Is it better to put 10% or 20% down?
Putting 20% down avoids PMI and lowers your monthly cost but 10% down may still be a good option if that’s what your budget allows.
4. Should I include HOA fees when calculating affordability?
Absolutely. Lenders factor in HOA fees as part of your total monthly housing expense.
5. How can I check how much house I can afford?
Use an online mortgage calculator or speak to a lender for a personalized estimate.
6. Where can I find $700,000 homes?
Use Redfin’s home search tool to explore listings in your target area. You can set price filters, view tax estimates, and get alerts for new listings or price drops.