What Income Do You Actually Need to Buy a $250K, $500K, or $1M House?

The path to homeownership isn’t just about saving for a down payment. Lenders and financial advisors use a simple benchmark to determine whether you can truly afford a house: the 28% rule. This guideline states that your monthly mortgage payment shouldn’t exceed 28% of your gross monthly income. Understanding this metric is essential if you’re trying to figure out how much you need to make to afford a $250K house or any property at different price points.

The Math Behind the 28% Rule

The 28% rule exists because it protects you from overextending financially. Your mortgage isn’t just the principal and interest—it also includes property taxes, homeowners insurance, and potentially private mortgage insurance (PMI) if you put down less than 20%. When you spend too much of your income on housing, you have less flexibility for emergencies, investments, and other living expenses.

Assuming current market conditions with a 7.03% APR on a 30-year fixed-rate mortgage, here’s how the numbers break down across three popular price points.

The $250K House: Entry-Level Affordability

With a 20% down payment ($50,000): Your monthly mortgage payment lands at $1,335, meaning you need to earn $4,768 monthly, or approximately $57,216 annually, to stay within the 28% rule.

With a 10% down payment ($25,000): The monthly payment climbs to $1,501, and you’ll add a $117 monthly PMI premium. Without PMI factored in, you’d need $5,361 monthly income ($64,332 yearly). Including PMI, you’re looking at $5,779 monthly income ($69,348 yearly).

The 10% down scenario shows why larger down payments matter—they immediately reduce your monthly obligations and eventually eliminate PMI once you hit 20% equity.

The $500K House: Mid-Level Ambitions

With a 20% down payment ($100,000): Your monthly mortgage sits at $2,669. You’ll need $9,532 in monthly income, or $114,384 annually, to comfortably manage this payment under the 28% rule.

With a 10% down payment ($50,000): The monthly payment increases to $3,003, plus $234 in PMI. Without PMI, you need $10,725 monthly ($128,700 yearly). With PMI included, that rises to $11,561 monthly ($138,732 yearly).

The jump from $250K to $500K roughly doubles your income requirements, highlighting how property prices directly scale your financial needs.

The $1M House: High-End Considerations

With a 20% down payment ($200,000): You’re looking at a $5,339 monthly mortgage payment, requiring $19,068 in monthly income ($228,816 annually) to meet the 28% threshold.

With a 10% down payment ($100,000): Your payment rises to $6,006 monthly plus $469 in PMI. You’d need $21,450 monthly income ($257,400 yearly) without PMI, or $23,125 monthly ($277,500 yearly) if you include insurance costs.

Strategies to Stretch Your Buying Power

These calculations assume a 7.03% APR, but interest rates fluctuate. If you secure a 6.50% rate on that $1M property with 20% down, your payment drops to $5,057—a meaningful reduction that affects your income requirements.

Improve your credit score. Better credit typically unlocks lower interest rates, which compounds into significant savings over 30 years. Pay bills on time and reduce existing debt to strengthen your profile.

Increase your income. Whether through a promotion, job change, or side income, boosting earnings is the most direct path to affording a larger property. Even a modest raise expands your options considerably.

Adjust your expectations. While the 28% rule is conservative, some buyers use a 30% to 35% threshold instead. However, this requires disciplined budgeting over the life of the mortgage, since stretching to 35% leaves little room for emergencies or other financial goals.

Save aggressively. A larger down payment reduces both your monthly payment and the total interest you’ll pay. It’s worth delaying your purchase to accumulate more cash if possible.

The relationship between how much you need to make to afford a $250K house and higher price points reveals a consistent principle: housing affordability ultimately depends on balancing your income, down payment size, interest rate, and willingness to commit a portion of your monthly budget to homeownership.