What's Your Real Estate Budget? A US Homebuyer's Income Guide to $250K, $500K, and $1M Properties

Building home equity through monthly mortgage payments remains one of the most accessible wealth-building strategies available to homeowners. However, the path to homeownership requires careful financial planning—not just having enough for a down payment, but maintaining sufficient monthly income to cover your mortgage and living expenses comfortably.

The 28% rule serves as the financial industry’s primary guideline: limit your mortgage payments to no more than 28% of your gross monthly income. We’ll use this benchmark to break down exactly what income level qualifies you for different property price points in today’s US market.

The Entry-Level Market: $250,000 House Income Requirements

A $250,000 property represents an accessible entry point for many first-time buyers. Assuming you secure a 7.03% APR on a 30-year fixed mortgage with a 20% down payment ($50,000), your monthly payment lands at $1,335. Using the 28% rule, this requires a monthly income of $4,768, translating to an annual salary of $57,216.

If your down payment capacity is limited to 10% ($25,000), the story changes significantly. Your monthly mortgage climbs to $1,501, plus you’re obligated to pay $117 monthly in private mortgage insurance (PMI) until you reach 20% equity. This scenario demands a monthly income of $5,361 ($64,332 annually) without PMI factored in, or $5,779 per month ($69,348 annually) when you include the insurance premium.

The advantage of a larger down payment becomes clear—it reduces monthly obligations and eliminates PMI altogether, providing welcome financial breathing room.

Mid-Range Territory: $500,000 House Income Threshold

Stepping up to a $500,000 property requires substantially different financial positioning. A 20% down payment demands $100,000 upfront—a significant hurdle that many buyers face. If you can manage this, expect a monthly mortgage of $2,669 at 7.03% APR. Meeting the 28% rule requires $9,532 monthly income, or $114,384 annually.

More realistically, buyers opt for a 10% down payment ($50,000). This results in a monthly mortgage of $3,003 plus $234 in monthly PMI charges. Your required monthly income jumps to $10,725 excluding PMI ($128,700 annually), or $11,561 when PMI is included ($138,732 annually).

The gap between the 10% and 20% down payment scenarios widens considerably at this price point, underscoring why accumulating sufficient savings becomes increasingly important at higher property values.

Premium Segment: $1 Million House Income Benchmark

Million-dollar homes demand serious income verification. A 20% down payment requires $200,000 in liquid reserves. Successfully making this down payment results in a $5,339 monthly mortgage (30 years, 7.03% APR). To comply with the 28% rule, you need $19,068 in monthly income—$228,816 annually.

For the 10% down payment path ($100,000), your monthly obligation rises to $6,006 plus $469 in PMI. This demands $21,450 monthly income ($257,400 annually) excluding insurance, or $23,125 monthly ($277,500 annually) when PMI is included.

Strategies to Expand Your Buying Power

These calculations assume fixed conditions, but several levers exist to improve affordability:

Optimize Your Interest Rate

The 7.03% APR used above isn’t written in stone. A rate of 6.50%—achievable through strong credit scores and Federal Reserve rate cuts—reduces a $1 million mortgage (20% down) from $5,339 to $5,057 monthly. Making on-time payments and reducing existing debt strengthens your negotiating position.

Adjust Your Spending Rule

While the 28% rule provides safe guardrails, some households stretch to a 30-35% threshold. This requires disciplined long-term budgeting but expands your property options. Choose this path cautiously, as it applies across your entire mortgage term.

Increase Your Income

Ultimately, boosting your earnings—through promotions, career changes, or side income streams—remains the most straightforward path to homeownership at higher price points. The relationship between income and affordability is direct and powerful.

The US housing market offers opportunities across multiple price ranges, but matching your income to your target property requires honest financial assessment and strategic planning around these core variables.