What is the down payment & income needed for a $600k home?

So you've got your eye on a $600k house? 

That's a big step! 

Understanding the amount of money you need to earn and save is extremely important because a mortgage on a home worth $600,000 or more is not a small amount.  

Mortgage lenders advise not spending more than 28% of your monthly income before taxes on housing costs. This is known as the front-end ratio.  

A down payment is typically somewhere from 5%-20% of the total price of the house.  

So, for this $600k house, you'd have to save somewhere from $30,000 to $120,000! Remember, the more you put down at the start, the less you will borrow and the lower your monthly payments could be.  

Ready to begin the process of buying a home worth $600,000? Start your home loan application today! 

A home worth $600,000 or more needs enough income to pay for the mortgage and other expenses. It's a big financial responsibility. The money you need can vary depending on factors like your mortgage rate and the initial down payment.  
 
Generally, banks want your mortgage payments to be less than 28% of your income before taxes. This includes property taxes and insurance.  

If you put down 20% on a home worth $600,000 with a 30-year, fixed-rate mortgage at 7%*, your principal plus interest is $3,193. This means that you need a monthly income of about $11,404.  

Keep in mind, it's a good idea to discuss a commitment like this with a financial adviser. 

How much you need for a down payment on a $600k house can vary depending on the mortgage you pick and your own money situation.  

Some mortgage options let you put down less. Just remember, that might mean you have to pay extra for private mortgage insurance.  

Your paycheck plays a huge part, too, when you're trying to buy a $600k house. Experts advise that your monthly mortgage payment should not be more than 28% of your pre-tax income. This payment includes the loan, interest, taxes and insurance.  

For a $600k house, especially if you're not putting a lot down, you'll probably need a hefty paycheck to afford the monthly payments. Consulting a mortgage adviser or financial planner could provide a better understanding of your affordable options. 

Whether or not you can afford this mortgage is determined by various factors. These factors include your other debts, the lender's debt-to-income ratio requirements and the mortgage’s interest rate.  

For a $600,000 mortgage, a 20% down payment is $120,000. Unless you have that much cash on hand, you may need down payment assitance to help get you to 20%. 

A 15% down payment on a home worth $600,000 is $90,000.  

A larger down payment reduces overall mortgage borrowing, payments and interest. Aim to keep mortgage payments under 28% of your gross monthly income.  

The principal, interest and property mortgage insurance on $600,000 house with a 15% down payment and a 30-year, fixed-rate mortgage with 7% rate would cost $3,662. To afford this, you would need a monthly income of about $13,079 or an annual income of about $157,000. 

A 10% down payment on a $600,000 house would be $60,000, but you'd still need financing for the remaining $540,000. This financed amount determines the monthly mortgage payments, not the house's total cost. 

A 5% down payment on a $600,000 house would be $30,000, but you'd still need financing for the remaining $570,000. The principal, interest and mortgage insurance would cost about $4,061 with a 5% down payment. You'd need a monthly income of about $14,504 to make this affordable.  

Increase your income sources to afford a larger house budget. 

Maintain a good credit score for a better chance of loan approval. Double-check your report for any items that you may need removed or adjusted before starting the application process. 

Save for a substantial down payment to reduce the loan amount and monthly payments. Or look into programs that could help you with making a down payment. 

Consider getting a FHA loan, which requires a lower down payment. Think about a VA loan if you're a veteran or the spouse of a veteran who meets the requirements. 

Stick to the recommendation of not spending more than 28% of your income on housing costs. Also, set a realistic budget and stick to it when home shopping.  

Consider additional costs such as property taxes, insurance and maintenance in your budget. You will also want to plan for closing costs that come with finalizing your loan. 

Do you already have a home in the $600k range that you've had your eye on? If you're ready to apply for a mortgage, we are here to help. You can receive a mortgage pre-approval with us in as little as five minutes.  

Mortgage pre-approval is a common first step that most homebuyers take. With pre-approval, you can show sellers that you're serious and know how much you're likely to be approved for. Start your pre-approval today to get a better idea if that home worth $600,000 or more is attainable. 

If you already found a $600k home you are hoping to purchase, begin the mortgage process today by starting home loan application. 

_{*Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard. Rate cannot predict where rates will be in the future} 

_{Rate is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.} 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.} 

_{All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate. Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.}