To afford such a home, most people will need to make an annual salary of at least $220,000, or about $18,000 per month. However, this is not enough alone to qualify for a one-million-dollar home. You will also need to have enough saved for a substantial down payment, usually around 20%, which equates to over $200,000. Keep in mind you will need to pay closing costs which are typically 2-5% in addition to your down payment.

Those nearing retirement with a significant amount of savings may be able to afford a one-million-dollar home with a lower salary and lower mortgage payments by making a larger down payment.

To purchase a million-dollar home, you will likely need to qualify for a mortgage. This will depend on a variety of factors such as your down payment, credit score, and debt to income ratio. The typical mortgage payment on a million-dollar home with a 20% down payment and a 30-year mortgage is around $4,500 per month. However, this can vary quite a bit based on the current interest rates. There are many mortgage calculators available that can help estimate your monthly payment.

 Conventional loans often have a maximum amount that can be borrowed, typically near $500,000 and may require a down payment of over $300,000. Triple E Homes routinely works with lenders in the State College area and connect you with an expert

 To afford a million-dollar home you will need a good credit score with minimal existing debt. Conventional loans often require credit scores near 620 or greater. To qualify for a jumbo loan, which is sometimes required for a million-dollar home, you will need a credit score of at least 740.

The debt-to-income ratio is a tool to assess the buyer’s financial situation. Think of this as the percentage of your gross monthly income that goes towards your monthly debt payments. Some common monthly debt payments include credit cards, student loans, car loans, etc. Having too much monthly debt before adding in your monthly mortgage payment decreases your borrowing power or the amount the lender is willing to give you. Lenders use this percentage to limit borrowers from taking on too much debt than they can afford. Typical DTI limits are 35-43%. 

When applying for a jumbo loan, which is often needed to afford a million-dollar home, many lenders require you have an equivalent of 6-12 months mortgage payments in your savings. For a million-dollar home this can range from around $30-60,000. This serves as a buffer to ensure you can continue making mortgage payments if you encounter an unexpected financial hardship.