How Much Do I Need to Make to Buy a $750k House?

Purchasing a $750,000 home requires understanding financial commitments beyond the advertised price. Prospective homeowners must assess their financial standing, evaluating income, existing debt, and the significant upfront and ongoing costs associated with homeownership.

Determining Your Affordability: The Debt-to-Income Ratio

Lenders evaluate mortgage eligibility using the debt-to-income (DTI) ratio, which compares total monthly debt payments to gross monthly income. This ratio is assessed in two ways: the front-end ratio and the back-end ratio. The front-end DTI, often capped around 28%, measures housing-related expenses. The back-end DTI, generally limited to 36% but sometimes extended to 43% or 50% for certain loan types, includes all monthly debt obligations.

A monthly mortgage payment, known as PITI, includes Principal, Interest, Property Taxes, and Homeowners Insurance. These components contribute to the front-end DTI calculation, forming the foundation of the monthly housing expense.

For a $750,000 home with a 20% down payment ($150,000), the loan amount is $600,000. With a 30-year fixed mortgage rate of 6.6% (August 2025), the monthly principal and interest payment is approximately $3,836.27. An estimated annual property tax rate of 1.1% ($8,250 annually or $687.50 monthly) and homeowners insurance of $4,000 per year ($333.33 monthly) further define the housing cost.

The total monthly PITI payment for this $750,000 house would be approximately $4,857.10. To meet the 28% front-end DTI limit, a gross monthly income of at least $17,346.79 ($208,161.48 annually) is generally required. This calculation assumes no other significant monthly debts.

Existing personal debts, such as car loans, student loan payments, or credit card balances, impact the back-end DTI ratio. For example, an additional $500 in monthly debt payments would raise the total monthly debt to $5,357.10. While the 28% front-end DTI is an initial hurdle, lenders also ensure total debt does not exceed the back-end DTI limit, typically 36%. In this example, with a gross annual income of $208,161.48, total debt would be about 30.88% of income, within the 36% limit. The minimum income needed is linked to meeting both DTI ratios, with the front-end ratio often being more restrictive.

Understanding Upfront Costs: Down Payment and Closing Fees

Purchasing a $750,000 home requires substantial upfront cash for the down payment and closing costs. The down payment represents the initial equity a buyer contributes, directly reducing the borrowed amount. Typical down payment percentages for a conventional loan range from 3% to 20% or more.

For a $750,000 home, a 3% down payment is $22,500, 5% is $37,500, and 10% is $75,000. A 20% down payment ($150,000) offers several financial advantages. It reduces the principal loan amount, lowering monthly mortgage payments and total interest paid. Contributing 20% or more also typically eliminates private mortgage insurance (PMI) on conventional loans.

Closing costs are additional fees paid at the real estate transaction’s consummation. These expenses cover various services and charges incurred during the home buying process, separate from the down payment. Common costs include loan origination fees, appraisal fees, and title insurance premiums. Other fees may encompass escrow fees, attorney fees (where required), and recording fees.

Closing costs generally range from 2% to 5% of the loan amount. For a $600,000 loan on a $750,000 home (with a 20% down payment), this translates to an estimated $12,000 to $30,000. These lump sums must be readily available at purchase, requiring sufficient liquid assets beyond the down payment.

Beyond the Mortgage Payment: Additional Monthly Expenses

Homeownership involves ongoing monthly expenses beyond the PITI components. While property taxes are included in PITI, they are recurring obligations assessed by local government entities. Tax rates can fluctuate based on local budgets and property value reassessments, directly impacting total monthly housing cost.

Homeowners insurance, also part of PITI, is a mandatory expense protecting the property against covered perils. Its cost varies based on location, construction type, and coverage limits. For conventional loans with less than a 20% down payment, private mortgage insurance (PMI) is an additional monthly cost. PMI typically ranges from 0.4% to 1.5% of the original loan amount annually, adding hundreds of dollars until sufficient equity is built.

Properties within planned communities or condominiums often incur Homeowners Association (HOA) fees. These monthly fees cover common area maintenance, shared amenities, and sometimes specific utilities. HOA fees represent another fixed monthly expense to factor into the housing budget.

Beyond direct housing-related payments, essential monthly costs include utilities like electricity, natural gas, water, sewer, and internet. These vary based on usage, property size, and local rates. Budgeting for ongoing maintenance and unexpected repairs is a frequently overlooked aspect of homeownership. Experts suggest setting aside 1% to 4% of the home’s value annually. For a $750,000 home, this is $7,500 to $30,000 per year ($625 to $2,500 per month) for routine upkeep and larger repairs.

How Loan Types and Credit Score Influence Requirements

The type of mortgage loan and a borrower’s credit score significantly modify home purchase financial requirements. Conventional loans are widely available, typically requiring a minimum credit score of 620, though 720 or higher often secures more favorable rates. These loans usually have DTI limits of 36% to 45% and require down payments starting from 3%, with 20% avoiding PMI.

Federal Housing Administration (FHA) loans offer lenient qualification criteria, allowing lower minimum credit scores (often 500 or 580) and down payments as low as 3.5%. While FHA loans make homeownership more accessible, they require both an upfront mortgage insurance premium (MIP) and ongoing monthly MIP payments, regardless of down payment size. This insurance adds to the total monthly cost and can affect DTI.

For eligible service members, veterans, and surviving spouses, VA loans offer a distinct advantage by typically requiring no down payment. This significantly reduces upfront cash needed. While the Department of Veterans Affairs does not set a minimum credit score, most lenders impose their own, commonly around 620. VA loans also have DTI guidelines, generally around 41%, and do not require private mortgage insurance, though a VA funding fee is typically applied.

A borrower’s credit score directly correlates with the mortgage interest rate. A higher score signals lower risk to lenders, enabling access to more competitive rates. Even a small interest rate reduction can result in substantial savings over a 30-year mortgage, decreasing the monthly principal and interest payment. Conversely, a lower score often leads to higher rates, increasing the monthly payment and raising the gross income needed to meet DTI thresholds, making qualification more challenging.