Owning a home worth more than $1 million is the dream of the majority of Americans. The real estate sector has hit such a peak that a decent house now costs nearly $1 million. While the price tag to own these houses is increasing every year, in this article, we will highlight the salary you must earn to be able to get a home loan for the purchase. Failing which, banks might not disburse the loans. Owning a house in America is now more expensive than ever before.

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Salary Required to Get a Home Loan for a House Worth $1 Million

Location plays an important part in the $1 million home that comes in different sizes based on regions. In the main cities, a $1 million house would be your typical family residence. However, in small towns, one can typically get a mansion-style residence for that much money. So, here’s how much salary you need to be able to afford that home loan.

Assuming that you do the minimum 20% down payment for a 30-year home loan term, with a 6.5% interest rate, the $1 million home would require a monthly payment of $5,057. Therefore, in a year alone, $60,684 would go toward paying off your mortgage. Also, homeowners’ insurance and property taxes will eat into the share of your yearly income.

So, the minimum salary required to get a home loan of $1 million currently stands at $175,000. Anything below that will be rejected by the banks as it does not meet their mortgage criteria. In addition, earning $175,000 a year still does not automatically qualify you for a home loan. Banks check your credit score, and your debts must also not be more than 36% of your income. If it exceeds the limit, the home loan will not be processed.