Your income is a major factor in the home-buying process. Not only does it determine what your budget and mortgage loan options are, but it also plays a role in whether you can afford ongoing costs, such as maintenance, property taxes, and homeowners insurance. Carefully evaluating your income is critical before you start your home search. Here’s what income you’ll need to earn if you’re eyeing a property priced around $1.5 million.
To get a $1.5 million mortgage, you’re likely going to need a jumbo loan, which is a home loan intended for more expensive properties. These are mortgages that aren’t backed by any government agency, such as the FHA or VA, and they go well beyond the conforming loan limits of traditional conforming conventional loans.
Jumbo loans are often harder to qualify for, though. Because they’re riskier for lenders (there’s more money on the line), they also tend to charge higher interest rates.
Here’s a look at what a $1.5 million home might look like from a mortgage standpoint. Keep in mind that rates vary by mortgage lender, as do the minimum down payment and other requirements. You may need to put down between 10% and 30% of the purchase price. Use the table below only as an example of what you might expect the monthly payment to be for a home in this price range based on current market conditions, including national averages for property taxes and homeowners insurance.
Keep in mind that your monthly payment and down payment aren’t the only costs to think about when shopping for a home. There will also be closing costs. Closing costs on a regular conforming loan typically total 2% to 5% of a home’s purchase price, so you should budget for a bit more when applying for a jumbo loan.
Each lender will have its own rules and qualifying requirements, but there are some general guidelines you can use to gauge whether your income is sufficient for the mortgage that a $1.5 million home might come with. See below for some of the more common ones.
According to the 28/36 rule, your new housing payment should take up no more than 28% of your monthly pretax income, while your total monthly debts (your mortgage, plus things like student loans, car loans, and credit cards) should total no more than 36% of your pretax income. These numbers are what lenders refer to as your debt-to-income ratios (DTIs).
If you work backward from that estimated monthly payment of $8,056 that we calculated above, the 28/36 rule would say you’d need an income of at least $28,771 per month — or about $345,257 per year — to afford the mortgage that comes with a $1.5 million home.
-
Monthly pretax salary: $28,771
-
Annual pretax salary: $345,250
With the 25% rule, you’ll only look at your post-tax income — otherwise known as your take-home pay. According to this rule, your mortgage payment should not exceed 25% of your monthly post-tax earnings. Based on an estimated monthly payment of $8,056, you would need a monthly post-tax income of around $32,224 to afford the mortgage on a $1.5 million property.
-
Monthly post-tax salary: $32,224
-
Annual post-tax salary: $386,592
The 35/45 rule is a similar approach, though it factors in both pretax and post-tax income. With this one, your back-end DTI ratio — which includes all your monthly debt payments — should be no more than 35% of your monthly pretax income and no more than 45% of your post-tax (take-home) income.
Using the estimated monthly payment of $8,056 calculated above, you would need to make about $23,017 per month before taxes — or $276,206 per year — to afford the mortgage on a $1.5 million home.
-
Monthly pretax salary: $23,017
-
Annual pretax salary: $276,206
-
Monthly post-tax salary: $17,902
-
Annual post-tax salary: $214,827
The above calculations are only accurate if your new mortgage payment is your sole monthly debt. Any other ongoing debts, such as credit card bills or personal loan payments, will alter the numbers, and you’ll likely need more income to cover the costs of your new house. Talk to a loan officer or mortgage broker to run the numbers for your specific situation.
It’s important to remember that homeownership comes with other long-term costs. You’ll want to make sure you have enough income to cover potential repairs and funds on hand for regular maintenance. Experts typically recommend budgeting at least 1% to 4% of a home’s purchase price for annual home maintenance. On a $1.5 million home, that would total about $15,000 to $60,000 per year.
Your property tax costs or homeowners insurance premiums could also increase over time
By using the Yahoo Finance home affordability calculator below, you can see how much home you can comfortably afford given your current income, debts, and other homeownership costs. This can help you determine whether you can afford a $1.5 million house.
Given current interest rates, homeowners insurance premiums, and property tax bills as of February 2026, you would need an annual pretax income of $276,206 to $345,250 to afford the mortgage that comes with a $1.5 million home. That’s assuming a 20% down payment, which is commonly required for jumbo loans.
The salary needed to afford a $1 million home depends on the interest rate you get, the size of your down payment, your debts, and other factors. A million-dollar 30-year jumbo mortgage at a 6.35% rate would come with a $6,222 monthly payment toward principal and interest. This would likely be well within budget on a $300,000 salary.
A jumbo loan can help you afford a $1.2 million home. These typically require large down payments (between 10% and 30%) but allow you to spread the home’s costs over 30 years.
Laura Grace Tarpley edited this article.
