How Much Income You Really Need to Afford a $500,000 Home
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From $107.88 $24.99Subscribe to KiplingerAs home prices increase, the income needed for a house is also climbing. We break down what you need to earn to afford a $500,000 home. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Buying a house is a goal for many Americans, but achieving that goal is becoming increasingly difficult. As housing costs climb faster than paychecks, many buyers are left wondering how far their money will really go.As home prices and interest rates rise, the income needed for a house has also increased. The median sales price of houses sold in the United States during the second quarter of 2025 was $410,800, according to Federal Reserve Bank of St. Louis data.Buying more house than you can afford is an expensive and stressful mistake, so it’s essential to do some calculations before you start shopping for a home. As the price for even modest homes reaches the $500,000 range, let’s take a look at just how much income you need to buy a $500,000 home.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.The income that you need to buy a $500,000 home will depend on many factors, including the cost of your home insurance, the size of your down payment, your interest rate and the length of your mortgage.The U.S. Department of Housing and Urban Development defines affordable housing as paying no more than 30% of your gross income toward your housing costs, including utilities.Using that rule of thumb, let’s break down a few different scenarios with the Fannie Mae mortgage calculator.Buying a $500,000 home with 10% down:Let’s assume that the home’s utilities average $200 per month, meaning your total home’s monthly payments are $4,042.In this scenario, you would need to earn $13,473.33 per month, or about $161,680 per year, to afford the home.If you save up more money for a larger down payment, the figures change, since your loan balance decreases and you won’t need to pay for private mortgage insurance.Buying a $500,000 home with 20% down:Once we add in $200 for utilities, your monthly payment is $3,666.To afford this mortgage, your monthly income would need to be $12,220, or you’d need a salary of about $146,640.Curious about today's mortgage interest rates? Explore and compare some of today's top offers with the tool below:In addition to considering your income, you’ll need to weigh how other factors can affect a home’s affordability:Before you buy a home, it’s essential to make sure you can really afford it. Start by getting pre-approved for a mortgage to make sure that you’re likely to be able to get the loan amount you’ll need.Just because you’re pre-approved for a mortgage doesn’t mean you can necessarily afford a mortgage of that amount, though. Consider how you’ll pay for future expenses, like repairs, homeowners' insurance increases and potential changes in your interest rate.Think about your long-term financial goals, too. For example, if you know you’ll be helping pay for your kids’ college educations in eight or nine years, you’ll want to make sure you don’t buy a home that’s so expensive that you’re not able to save toward that financial goal.Using the 30% rule as a guide, most buyers would need an annual income between $146,640 and $161,680 to comfortably afford a $500,000 home, depending on their down payment and monthly expenses.While these figures can serve as a helpful benchmark, your true affordability depends on your debt load, savings, interest rate and long-term financial goals. Taking time to understand the full picture can help you make a confident, sustainable homebuying decision.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Paige Cerulli is a freelance journalist and content writer with more than 15 years of experience. She specializes in personal finance, health, and commerce content. Paige majored in English and music performance at Westfield State University and has received numerous awards for her creative nonfiction. Her work has appeared in The U.S. News & World Report, USA Today, GOBankingRates, Top Ten Reviews, TIME Stamped Shopping and more. In her spare time, Paige enjoys horseback riding, photography and playing the flute. Connect with her on LinkedIn. Kiplinger is part of Future US Inc, an international media group and leading digital publisher. Visit our corporate site. © Future US, Inc. Full 7th Floor, 130 West 42nd Street, New York, NY 10036.