As of the third quarter of 2025, the national median sales price for a single-family home is $426,800, according to the Metropolitan Median Area Prices and Affordability and Housing Affordability Index from the National Association of Realtors. In the West, the median was $633,900, well above the $500,000 mark. In other words, buying a half-million-dollar property is increasingly common.
Here’s what you need to know about buying a $500,000 home with a mortgage and how to calculate how much house you can afford.
[Read: Best Mortgage Lenders]
How Much House Can You Afford? A Rule of Thumb
When estimating housing affordability, there are two schools of thought: You should spend 28% or less of your monthly income on housing, and you can afford a house that’s 2.5 times your annual salary at most.
The 28/36 rule is used by mortgage lenders when calculating how much house you can afford based on your income. The first number, 28%, is the maximum amount your monthly payment should be as a portion of your gross monthly salary before income taxes and other deductions, such as health insurance and 401(k) contributions. It covers your entire monthly payment, including property taxes, home insurance and mortgage insurance. Additionally, you should spend no more than 36% of your gross income on total debts, including a home loan as well as other debts like an auto loan or personal loan. This can feel limiting if you’re in a single-income household. For example, if your monthly housing payments are $4,000, the 28% guideline suggests a gross monthly income of about $14,285 monthly, which is over $170,000 annually. But if you’re applying for a mortgage with a spouse, typically the lender will consider both incomes.
Per the rule that you can afford a house that’s 2.5 times your annual income, your household would need to take home $200,000 per year to afford a $500,000 home.
Calculating the Payment on a $500K Home
The income you need to afford a $500,000 property varies greatly depending on many factors. When determining your estimated monthly payment, ask yourself these questions:
— Where is the property located? Property taxes are a large component of your housing costs, since most mortgage lenders require you to pay your taxes as part of your monthly payment through an escrow account. Depending on where you live, effective property taxes can range from 1% to about 3%. Check with your municipality’s tax assessor’s office to get an estimate of what you’d pay, or ask your real estate agent for a home’s property tax history from previous assessments.
— How much is your down payment? Someone who puts 20% down is going to have much lower monthly payments than someone who makes the minimum down payment. For one, the starting principal balance of the loan will be higher, which would add to the monthly payments. Plus, conventional loan borrowers who put less than 20% down will be required to carry private mortgage insurance, or PMI. Those with a Federal Housing Administration loan will also pay monthly and up-front mortgage insurance premiums.
— What mortgage rate can you qualify for? Mortgage rates are widely impacted by current economic conditions, making them largely out of your control. However, you might qualify for a lower mortgage rate if you have a high credit score and a low debt-to-income ratio. You can also shop around with multiple mortgage lenders to get the lowest possible rate for your financial situation, but you won’t be able to get a 4% mortgage rate if prevailing rates are closer to 6% or 7%. One exception is mortgage assumption, but that’s rare.
— What loan term will you choose? Most homebuyers choose a 30-year fixed-rate mortgage, which comes with lower monthly payments but is more expensive to repay over time. If you want to save money and pay off your mortgage faster, you might choose a 15-year mortgage, but that will result in substantially higher monthly payments. You might also consider an adjustable-rate mortgage, which usually starts off with a lower rate for a fixed period before the rate (and monthly payment) can change.
[Calculate: Use Our Free Mortgage Calculator to Estimate Your Monthly Payments.]
The chart below shows what the monthly mortgage payment might look like on a $500,000 home, assuming a 30-year fixed-rate loan at a 6.39% mortgage rate.
Two Scenarios for a $500K House: What Is the Monthly Payment?
With a high down payment, low property taxes and cheaper insurance, the mortgage payments on a $500,000 home may be as low as $3,016. To adhere to the 28/36 rule, your gross monthly income would need to be $10,772, which is roughly $129,264 annually. Remember that this can include your household income, presuming that your co-borrower is also on the mortgage.
However, your monthly payments may be as high as $5,968 if you have a small down payment, a higher property tax rate, private mortgage insurance and homeowners association fees. To afford the higher-end monthly payment, you’d need to make about $21,314 monthly — that’s $255,773 per year.
[READ: Compare Current Mortgage Rates]
The Salary Needed to Buy a $500K Home Varies
Housing affordability rules are not one-size-fits-all. Whether you can afford a $500,000 home depends on a variety of factors that are within your control — and some that are not. For example, are you in a dual-income household? Do you have a large sum of money to use as a down payment? Do you have sufficient cash reserves that can make a higher-value mortgage less risky to lenders?
To truly find out if you can afford a $500,000 home, you’ll need to get preapproved through a mortgage lender. And when in doubt, be more conservative with your estimates: Just because you can technically afford a half-million-dollar home doesn’t mean that you need to spend that much money in your particular market. Discuss your homebuying plan with a real estate agent and mortgage loan officer — but it may also be prudent to seek the advice of a reputable financial planner.
After all, your home is likely to be the most expensive purchase you’ll make in your lifetime, so make sure a $500,000 property comfortably fits into your budget.
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The Salary You Need for a $500K House originally appeared on usnews.com
Update 12/19/25: This story was previously published at an earlier date and has been updated with new information.
