Forget the generic online calculators for a moment. For a $700,000 house in 2025, the responsible income isn’t one number, It’s a spectrum from $185,000 to $225,000.
- The lower end is for the unicorns: perfect credit, 20% down, and buying in a tax-friendly state like Wyoming.
- The higher end is the reality for most, especially if you’re wrestling with a 10% down payment in a high-tax state like Illinois.
I recently walked a client couple, the Garcias, back from the brink. They were pre-approved for $700k on a $175k income. On paper, it worked.
In reality, it would have meant canceling their kids’ sports, shuttering their vacation fund, and living on a diet of financial anxiety. The bank’s approval isn’t a green light; it’s just a starting line.
Are you trying to win the race or just finish without injury?
Key Takeaways Ahead: What Salary Do I Need to Afford a $700,000 House?
Step 1: Calculate Your Real Monthly Payment (PITI)
Your mortgage payment is not the only housing cost. Your true monthly housing expense is PITI:
Principal
Interest
Taxes
Insurance.
Here’s a realistic breakdown for a $700,000 house, assuming a 20% down payment ($140,000) and a $560,000 mortgage:
Principal & Interest:
With a 30-year fixed-rate mortgage at 6.8%, your P&I payment would be approximately $3,630 per month.
This rate aligns with projections from major financial institutions for borrowers with credit scores over 740.
Property Taxes:
This is the budget killer I warn everyone about. Especially in a state like New Jersey!
A common estimate is 1.1% of the home’s value annually ($642/mo), but this varies wildly. For instance, property taxes on a $700k home in New Jersey (averaging 2.23% according to the Tax Foundation) would be over $15,600 a year, while in Hawaii (0.27%) they would be closer to $1,890.
Assume your annual tax will be at least 1.25% of your purchase price to be safe.
Homeowner’s Insurance:
According to 2025 data from the Consumer Federation of America, the average annual homeowners insurance premium is around $3,303 but for a higher-value home, it’s safer to budget more.
Let’s estimate $300 per month.
* Estimated Total PITI: ~$4,600 / month
Michael Ryan Money Home Affordability Calculator
Want to play around with some home affordability numbers? Use the calculator below. Use the sliders to adjust your income, down payments and current debts to get some great estimates of how much home you can afford.
🏠 Home Affordability Forecaster
Comfortable Budget: $0
Maximum Budget: $0
(Estimated PITI: $0/mo)
Step 2: Add the Hidden Costs That Wreck Budgets
This is the step that most people miss. PITI is just the beginning.
Private Mortgage Insurance (PMI)
If your down payment is less than 20%, your lender will require PMI. According to the Consumer Financial Protection Bureau (CFPB), PMI typically costs 0.5% to 2% of your loan amount per year.
On a $630,000 loan (with a 10% down payment), this could add $260 to $1,050 per month to your payment.
Don’t Forget Closing Costs
On top of your down payment, you’ll need to budget for closing costs, which typically range from 2% to 5% of the home’s purchase price. For a $700,000 house, that’s an additional $14,000 to $35,000 in cash you’ll need at closing.
These costs cover lender fees, appraisals, title insurance, and other administrative expenses.
Homeowners Association (HOA) Fees & Maintenance
If the home is in a planned community, you will have HOA fees, ranging from $100 to over $1,000 per month. For maintenance, I advise clients to use the 1.5% Rule for homes built in 2025, budget 1.5% of the home’s value per year for upkeep.
For a $700k house, that’s $10,500 a year, or about $875 per month. Don’t just plan for the mortgage payment; budget for the home’s appetite.
Step 3: The Lender’s Math vs. Your Reality
Here’s a dirty little secret: the 28/36 rule isn’t for your benefit. It’s the lender’s maximum risk tolerance—the absolute cliff edge they’re willing to let you stand on before they believe you’ll fall.
- The 28% “Front-End” Rule: Your total housing cost (PITI) should not exceed 28% of your gross monthly income.
- The 36% “Back-End” Rule: Your total debt payments (PITI + car loans, student loans, etc.) should not exceed 36% of your gross monthly income. This “Back-End” ratio is also known as your Debt-to-Income (DTI) ratio. Lenders scrutinize your DTI because it shows how much of your income is already committed to other debts, giving them the clearest picture of your ability to handle a new mortgage payment.
💡 Michael Ryan Money’s Framework: The 25/33 Lifestyle Rule
Forget the bank’s math. My rule is simple and protects your future:
- Your PITI should not exceed 25% of your monthly take-home pay (net).
- Your total debts (PITI + all other payments) should not exceed 33% of your gross monthly income.
This isn’t just a rule; it’s a firewall for your financial life.
Strategies to Make a $700k House More Affordable
If that $200k+ salary figure feels out of reach, don’t be discouraged. Many homeowners in your position can still achieve their goal by strategically managing these key financial levers.
- Increase Your Down Payment: The most powerful strategy. A larger down payment reduces your loan amount and helps you avoid PMI.
- Improve Your Credit Score: A higher score qualifies you for a lower interest rate. See our Credit Utilization Guide for tips.
- Choose Your Loan Term Wisely: A 30-year mortgage offers a lower payment, but a 15-year mortgage builds equity faster and saves a staggering amount in interest.
- Shop for a Lower Tax Jurisdiction: A $700k home in a lower-tax county can be dramatically more affordable month-to-month.
Frequently Asked Questions (FAQ)
What is the monthly payment on a $700,000 house?
Assuming a 20% down payment, 6.8% interest, and average taxes/insurance, the PITI is roughly $4,500 per month. With a smaller down payment, PMI, HOA fees, and maintenance, the true monthly cost can easily exceed $6,500.
How much of a down payment do I need for a $700,000 house?
A 20% down payment ($140,000) is ideal to avoid PMI. However, some conventional loans allow as little as 3% down ($21,000), and FHA loans require 3.5% down ($24,500), but both will require you to pay mortgage insurance.
Can I afford a $700k house with a $150k salary?
It would be extremely difficult and financially risky. Your debt-to-income ratio would likely be too high for most lenders and would certainly violate the 25/33 Lifestyle Rule, leaving you “house-poor” with little room for savings or other expenses.
How do property taxes affect affordability for a $700k house?
Dramatically. As shown above, the difference in property taxes between a high-tax state like New Jersey and a low-tax state like Colorado can change your monthly payment by over $1,000 on the exact same priced home.
Final Takeaway: From Dream to Decision
Affording a $700,000 house is a significant financial challenge, but it is not a mystery. By understanding these numbers and planning for all the costs, you can move from dreaming and worrying to making a confident, informed decision.
Before you commit, be sure to use a good home affordability calculator to run your own numbers. Your down payment buys the house. Your discipline buys the lifestyle.
I’ll leave you with the absolutely simplest, best advice on home affordability. Multiply your salary by four – that’s the amount of home you can comfortably afford!
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
