How much do you need to make to afford a $450k house?
To afford a $450,000 house with $90,000 saved, 20% of the price, you need an income of about $155,000 a year at a 6.71% mortgage rate. The payment comes to about $3,612 a month with property tax and insurance, and $46,639 stays in the bank after closing.
Saving 20% of the price does not mean putting 20% down. Of the $90,000, $13,500 goes to closing costs and $46,471 is held back as a reserve, six months of what the house and the rest of life will cost. That reserve is our rule, not a lender's, and it caps the down payment at $30,029. At this income the lender's payment limit is met with $29,861 down, 6.64% of the price. Below 20% down a lender adds mortgage insurance, about $298 a month here, and it is inside the payment above.
What sets the salary is the lender's payment test. At $155,000 a year, gross pay is $12,917 a month and this house takes $3,612 of it, 28%, right at the 28% ceiling lenders use. Earn less and that ceiling shrinks the loan a lender will offer, and the cash you have cannot cover the gap.
Savings move the salary more than most people expect. With half the price saved, $225,000, the income needed falls to about $140,000. With 15% saved, $67,500, no income reaches this house: the down payment, closing costs and six-month reserve need more cash than that. A lender might still approve that loan; the reserve is our rule, there so a repair or a lost job does not become a missed payment.
The rate matters too. With $90,000 saved, a 5% mortgage brings the income needed down to about $136,000, and at 7.5% it climbs to about $166,000. The table shows every combination, so you can find the row closest to your own savings.
These figures assume a 30-year mortgage at 6.71%, 1.2% property tax, 0.4% insurance, closing costs of 3%, household spending of 60% of gross income including the rent the house replaces, and no other monthly debt. A car payment or student loan comes straight off the 36% back-end ratio and raises the salary you need. Property tax varies a great deal by state, and it is inside every figure here.
Cash saved vs mortgage rate
Every combination, computed the same way — find your row and your column.
| Cash saved | 5% | 5.5% | 6% | 6.5% | 6.71%our default | 7% | 7.5% |
|---|---|---|---|---|---|---|---|
| $45,000 (10%) | — | — | — | — | — | — | — |
| $67,500 (15%) | — | — | — | — | — | — | — |
| $90,000 (20%) | $136,000 | $141,000 | $147,000 | $153,000 | $155,000 | $159,000 | $166,000 |
| $135,000 (30%) | $132,000 | $137,000 | $142,000 | $148,000 | $150,000 | $154,000 | $159,000 |
| $225,000 (50%) | $123,000 | $128,000 | $133,000 | $138,000 | $140,000 | $143,000 | $149,000 |
Each cell is the lowest salary a lender would need to see for this house. Read down a column to see what more savings is worth: more cash lowers the income needed. A dash means no income gets there with that much saved: the down payment, the closing costs and the six-month reserve we hold back need more cash than the row has. A lender might still approve the loan; the reserve is our rule, not theirs.
Assumptions
- Home Price
- 450000
- Cash Saved
- 90000
- Mortgage Rate
- 6.7%
- Mortgage Years
- 30 yr
- Property Tax Rate
- 1.2%
- Closing Cost Rate
- 3%
Frequently asked
What salary do you need to afford a $450k house?
About $155,000 a year with $90,000 saved, at a 6.71% mortgage rate. With half the price saved it falls to about $140,000.
Does saving 20% mean I can put 20% down?
Not once closing costs and a reserve are counted. Of $90,000, $13,500 goes to closing and $46,471 is held back as a reserve, which caps the down payment at $30,029. This page puts down $29,861, 6.64% of the price, because that is all the lender's payment limit needs at this income.
Is the income for a $450k mortgage the same as for a $450k house?
No. A $450k house with $90,000 saved needs a loan of about $420,139. A $450k mortgage is a bigger loan than that, so it takes a higher income than the figure on this page.
Should I wait for mortgage rates to fall?
At 7.5% the income needed is about $166,000; at 5% it is about $136,000. Saving more lowers it as well, and unlike the rate, that part is in your hands.
What about student loans or a car payment?
They come off the 36% back-end limit, so every $100 a month of other debt takes roughly $100 a month of mortgage payment away, and the salary needed rises to make up for it.
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