how much money per year do i need to make to afford a $600,000 house?
June 13, 2008 · Print This Article
davidagalvan asked:
Say I’m looking for a 30-year fixed rate mortgage, and I can put $100,000 down.
Say I’m looking for a 30-year fixed rate mortgage, and I can put $100,000 down.
So I guess what I’m really asking is how much should my annual salary be to cover a $500,000 loan with a 30-year fixed interest rate of 6%? Or, is there a handy website that will allow me to calculate this?
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Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
If you really need to ask this question ,then you do not make enough.
according to my old professor, you should never buy a house that is more than ten times your yearly salary (if your married, then ten times your spouse + your yearly income). So, according to this formula, if you are single, you should make about $60,000 a year and have a 40 year mortgage.
Seems your question is not sufficient to answer your questions, as you are missing, in how much time you want to buy this house, but for your convience,
if you want to buy a $600, 000 say in 10 years with interest rate of 5%, you would need to deposit $47700.00 to accumulate $600, 000.00
interest rate is interest you would earn in bank or depositing this amount. if you need it in two years, then you would need $292, 000 to accumulate this fund.
hope you know, how u much you want to earn
formula to calculate this is Future Value(rate, no. of year, amount, present value, type)
regards
I’ve heard that it should be no more than 2 1/2 times your gross annual salary (60K a year will not pay the $3600 a month principle and interest payments on a 40 yr FIXED rate, not to mention taxes and insurance)
We made 52K in 2006, we barely made our $900/mo payments on our $149k house (which exceeds my formula by almost $20K)
$500000 for 30 years at 6% interest you have to pay $2998 per month if paid monthly. You need to earn $2998 + Your other expenses inorder to cover the loan.
Ravi
This is where people run into trouble. You might not have difficulty paying the mortgage of 5,000 a month but what about taxes and insurance on a house that expensive. Those items could add another 2-3K to your monthly bill. 8k monthly to the mortgage com. plus the rest of expensive. I guess a salary of 350,000.00 a year might cover it. As long as your other monthly expenses are not astronomical.