How much income to qualify for 1 million mortgage

The median sales price of houses sold in the U.S. hit $347,500 in the first quarter of 2021, according to the St. Louis Federal Reserve. That means a million-dollar home is worth close to three times what most people pay for their properties.

That kind of spending will either buy you a mansion in most parts of the country -- or a nice place in an expensive city. But, what exactly would you have to spend to get it?

Let's take a look at what the monthly payments might look like if you bought a $1 million place to call your own.

What you need to know about mortgages for $1 million homes

First things first. Your specific monthly payment would be based on exactly how much you borrow to buy your $1 million property, as well as the interest rate and term for your loan.

You'd have to take out a jumbo loan to buy a $1 million home. A jumbo loan exceeds the limits set by government-sponsored agencies, while regular, conforming loans do not.

Jumbo loans can be harder to qualify for than conforming loans. And the jumbo mortgage rates are often higher. Plus, most jumbo lenders require at least a 20% down payment. So if you bought a $1 million home, you'd probably take out a mortgage for around $800,000 and put at least $200,000 down. It could take a long time to come up with such a large down payment.

Here's what monthly payments might look like on a $1 million home

Let's assume you have your $200,000 down payment and you qualify for a jumbo loan for the remaining $800,000. You're ready to buy your million-dollar place.

You'd need to get a personalized rate quote, as different borrowers qualify for different rates. But these examples can give you a good idea of what you'd end up paying per month.

Don't forget, your mortgage principal and interest aren't the only payments you need to make. You'll have to pay taxes and insurance too. These can vary dramatically depending on where you live. Here are some approximate monthly payments for a 30-year or 15-year mortgage.

Data source: Estimates using The Ascent's mortgage calculator.

You'd need about $56,100 a year to pay for the 30-year mortgage in our example. Since research from The Ascent put the median household income at almost $62,000 a year, a $1 million home is well out of reach for most people. This is why most people's homes cost a fraction of this amount.

Can (and should) you buy a $1 million home?

If you're considering buying a $1 million home, you'll want to make sure you can comfortably make those monthly payments. Ideally, that means your total housing costs will be well below 30% of your income. That's the maximum experts recommend you spend on housing.

You should also be aware that other expenses of home ownership, such as utilities and maintenance, are typically higher with a more expensive home. So be sure to take these expenditures into account when you decide if it's worth buying a home at such a high price.

Finally, consider your other financial goals and your ability to cover those large payments in an emergency. Consider whether paying so much for a house will make it more difficult to accomplish other things you dream of, such as early retirement or saving for a vacation. And make sure you have enough savings in an emergency fund to see you through a job loss or other unexpected event. If you don't, you may want to scale down your expectations and choose a lower-priced home.

On the other hand, perhaps you can come up with the requisite down payment, easily cover your monthly mortgage payments, and still meet your financial goals. As long as you can easily save up enough in an emergency fund to cover three to six months of living expenses -- including your new mortgage payment -- then you're in a good position to move forward. You can go ahead and purchase that $1 million property you've been dreaming of.

Still have questions?

Here are some other questions we've answered:

• How to Create a First-Time Homeowners’ Budget
• Down Payments: What They Are & How They Work
• What Is a Jumbo Loan?

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If you want to uncover more about the best mortgage lenders for low rates and fees, our experts have created a shortlist of the top mortgage companies. Some of our experts have even used these lenders themselves to cut their costs.