You might think $1 million is a lot, but even that much money doesn’t go as far as it used to. Consider in today’s economy, a stack probably won’t be enough to buy a Porsche 918 Spyder (for the sports car lovers) or the first appearance of Batman (for the comic book aficionados). But, $1 million can still buy you a lot of house in most parts of the United States, as the median home sale price was $419,200 at the end of 2024, according to Census Bureau data.
Of course, where you want to live has an outsized impact on whether $1 million can get you a mansion to make all your neighbors stare or merely something more akin to the minimalist Icelandic-inspired cottage the protagonist of the hit TV show “The Good Place” calls home.
About 1.4% of U.S. counties have median home prices in price ranges starting at $750,000 and heading upward of $1 million, according to 2024 data from the National Association of REALTORS. Many of these counties are scattered along the West Coast and East Coast. Take Santa Clara County, California, for example—part of the San Francisco Bay Area and where you’ll find Silicon Valley—where the median home price clocks in at $1,517,190, per NAR.
So, how much income do you need to afford a $1 million home, anyway? There are a few calculations you can do to figure this out, and factors such as your down payment amount, your mortgage interest rate, and your debt burden play a big role. But, as a good base for starting the analysis, a salary of $250,000 could potentially allow you to buy a $1 million house.
Now, let’s dive in and take a close look at what you need to know.
How to calculate DTI and why it matters for getting a mortgage
Your debt-to-income ratio, abbreviated as DTI, is a way of comparing your gross monthly income against your monthly debt payments and housing costs. To calculate this number, add up your monthly rent or mortgage payment plus the minimum monthly payments you must make on student loans, auto loans, credit card balances, etc. Then divide that number by your gross monthly income and multiply the result by 100 so you can write it as a percentage.
Let’s consider someone who earns $120,000 per year to keep the math straightforward. That comes out to a $10,000 gross monthly income. If they have a $2,000 monthly mortgage payment, a $300 student loan payment, and a $500 car loan payment, that represents a debt-to-income ratio of 28%. We find that by tallying up the monthly debt and housing payments at 2,800, dividing 2,800 by 10,000, and multiplying the resulting 0.28 by 100 to get 28%.
You might need a jumbo loan to buy that $1 million home
A typical mortgage is a “conforming loan,” meaning it falls within conforming loan limits set by the Federal Housing Finance Agency (FHFA) and is eligible to be purchased by Fannie Mae or Freddie Mac after the lender of your choice originates it. The FHFA updates its conforming loan limits each year, and in most parts of the U.S., the limit is $806,500 for one-unit properties in 2025.
In some high-cost-of-living areas, the limit increases to $1,209,750.
That means, depending how large a down payment you are able to make and how much of your desired home’s sticker price you need to finance as a result, you might need a jumbo mortgage, which exceeds conforming loan limits. Jumbo loans tend to have stricter requirements, including:
- Better credit scores. While you may be able to get a conforming, conventional mortgage with a score of at least 620, you’ll probably need a FICO Score of 700 or even 720 to be considered for a jumbo loan.
- Bigger down payments. You might be able to get a conforming mortgage with a down payment amount as low as 5%, or 3% if you’re a first-time homebuyer. But for a jumbo loan, expect to put at least 10% down, and know that some lenders even ask for applicants to be able to put 30% down.
- Lower DTI. To get approved for a jumbo loan, you’ll likely need a DTI of 36% or lower. By way of comparison, for smaller mortgages, lenders may work with applicants who have DTIs up to 43%.
- Cash reserves on hand. You may have to show that you have enough in savings or other assets to cover up to 12 months of loan payments, to minimize the risk to the lender that you’ll fall behind.
- A second appraisal. While pretty much every home sale requires an appraisal, buying a home with a jumbo loan commonly requires two appraisals.
In addition, jumbo loans often have slightly higher interest rates than conforming mortgages.
To sum up, it’s not necessarily the case that you’ll need to take out a jumbo loan to buy a $1 million house. It will depend on what the conforming limit is where you’re buying and how much you need to borrow after your down payment is subtracted from the home price. But there’s a possibility you will need a jumbo mortgage when shopping in this price bracket, and it’s wise to be prepared for the additional requirements you’ll need to meet if that’s so.
Guidelines for figuring out how much house you can afford
Jacob Wood, a broker with Coldwell Banker Warburg, notes that a quick rule of thumb is that you may be able to afford a home costing three to four times your annual income. That would mean someone with a yearly salary of $250,000 would be in a reasonable position to consider a $1 million home.
“A good, general calculation is that an $800,000 mortgage equals a $5,000 monthly mortgage payment,” Wood adds.
As is the case with a home at any price point, the amount you can afford to put toward your down payment will impact how high your monthly payment is, as well as how much interest you’ll pay over the life of your mortgage.
We’ve run some numbers through the online mortgage calculator from the U.S. Department of Defense Office of Financial Readiness to get an idea of how big that difference actually is. (There are many such calculators available from different sites if you’re looking to generate a few estimates.)
If you put 20% down, which is a $200,000 down payment on a $1 million house, you’re left financing $800,000. With a 30-year repayment term and a 7% interest rate—leaving property tax and insurance at zero for the sake of simplicity—the estimated monthly payment is approximately $5,322. Over the course of 30 years, you’d pay about $1,116,071 in interest charges.
But, if you only put down $100,000 (a 10% down payment) and finance $900,000, that monthly payment increases to about $5,988, while interest paid over the life of the loan goes up to approximately $1,255,582.
Two additional guidelines we’ll look at for determining whether you can afford a $1 million house are the 28% rule and the 28/36 rule. Both start by determining 28% of your gross monthly income, and instructing that you keep your housing payment at or below that amount.
Someone who earns $250,000 annually makes a gross monthly income of roughly $20,833. And 28% of that is about $5,833. Thus, based on the example we calculated above, someone with a $250,000 salary can likely afford a $1 million home. But, when doing the math to make sure you’re good by the 28% rule, your housing payment should include principal, interest, taxes, and insurance. Our hypothetical included only principal and interest, meaning you’ll want to run your own numbers that will more specifically apply to your situation.
The 28/36 rule builds on the 28% rule. It states that your mortgage should take up no more than 28% of your gross monthly income, and your overall monthly debt payments—including your mortgage plus other debts like student loans or an auto loan—should take up no more than 36%. Continuing the example of someone who earns a salary of $250,000 and has a $5,833 monthly mortgage payment, that means other debts should be at $1,667 per month or less.
Where are $1 million homes the norm?
“The ‘luxury market’ is defined as the top 5% to 10% of the highest prices in any market,” says Wood of Coldwell Banker Warburg. “Across the U.S. last quarter, that means an entry threshold of around $1.2 million, which rose to $4 million in Manhattan. So a price of $1 million could very well be considered luxury in all but the largest urban markets.”
How far can $1 million take you in large, urban markets like NYC? Andrea Saturno-Sanjana, also a broker with Coldwell Banker Warburg, offers the following example of what she thinks such a budget might get a buyer in Manhattan’s Upper West Side.
“[That might buy a] one-bedroom, one-bath condominium unit with double-height ceiling, loft and exposed brick in a 1910 Brownstone on a Central Park block in a historic district,” she says.
The following are the counties with the highest median home values according to the NAR data we referenced earlier. In these places, a monthly mortgage payment can be expected to exceed $8,000:
- Marin County, CA: $1,579,260
- San Mateo County, CA: $1,558,790
- Santa Clara County, CA: $1,517,190
- Nantucket County, MA: $1,459,650
- Teton County, WY: $1,419,960
- San Francisco County, CA: $1,407,780
If you’re surprised to see a county in largely rural Wyoming make the list, don’t be. Teton County boasts easy access to Grand Teton National Park as well as the popular Jackson Hole Mountain Resort. Plus, approximately 97% of the land in the county is government owned or managed, meaning very little of it is available for the construction of private homes—and what is available commands a hefty premium.
A useful measure of where homes tend to be more expensive are where the FHFA conforming loan limits are higher than the standard $806,500 for 2025. You can find a spreadsheet here that lists 2025 limits for all counties and county-equivalent areas in the U.S.
The $1 million takeaway
In most parts of the country, a $1 million budget for your next home lets you pick from the crème de la crème of the housing market. Remember that it’s more than twice the nationwide median home price, after all. However, in expensive markets such as NYC or many parts of California, $1 million won’t get you nearly as much house for your money.
The income needed to afford a $1 million home will depend on factors including your down payment amount, whether you have to pay for private mortgage insurance—which you typically will if your down payment is less than 20%—the interest rate you secure on your home loan, and any other debts you’re carrying. With that caveat, earning $250,000 per year means you’re at least in a solid position to consider a $1 million house.
If you’re running the numbers and come to the conclusion a $1 million sticker price is a stretch for you, don’t panic. Rob McGibney, president and chief operating officer at builder KB Home, advises taking the long view as you search for the right home for you.
“Realizing your original budget no longer works can be discouraging, but it doesn’t mean homeownership is out of reach,” he says. “Remember that owning a home is a long-term investment, and the goal isn’t just to buy—it’s to buy smart.”
