If you are looking into buying your own home, you may be wondering how in the world anyone can afford to buy a million-dollar home. This is so far outside of most people’s budget that it can seem all but impossible to achieve.
The truth is that many people cannot afford million-dollar homes, and so they don’t understand how others can. These are huge investments, and you have to earn a certain kind of income to be able to buy a home like this.
Many people are curious about who exactly is able to afford this kind of house and how they got to that point. Keep reading to find out how people are able to afford million-dollar houses.
Table of Contents
- How Does Anyone Afford a Million Dollar Home?
- What Kind of Down Payment do You Need for a Million Dollar Home?
- Do You have to be Rich to Afford a Million Dollar House?
- Do You Have to be a Millionaire to Afford a Million Dollar Home?
- Is a Million Dollar Home a Mansion?
- How Can Someone Afford a Million Dollar Home?
How Does Anyone Afford a Million Dollar Home?
With buying a home being such an expensive option, it is not uncommon for people to look at a million-dollar home in awe. It may seem like an unattainable dream to own a million-dollar house, but it really comes down to earning a good salary.
It is estimated that you need to earn at least $225,384 in order to be able to buy a million-dollar home and make the mortgage payments. This does not include other expenses that might come up from owning such a large home.
This is something that is pretty unattainable for most of the US population as many do not earn that much yearly. Making a million-dollar home is a very expensive option that only some of the top earners could afford.
To be able to buy a home like this, you have to work a very good job that pays a salary far above the average income. It is also best if you have two income streams coming in rather than just one.
Combining two higher-paying salaries together will help you to reach that goal much faster./ many people may also be investing in real estate and flipping other properties to earn more on the side.
Nowadays, many people have side hustles that help them to earn more without having to work more than one job. This has helped many people achieve their financial goals and buy that million-dollar houses.
What Kind of Down Payment do You Need for a Million Dollar Home?
A million-dollar home is not the average home that you will see going up for sale. This is because not everyone can afford to buy this kind of house with their budget.
When it comes to purchasing a home, one of the biggest things to consider is the down payment. This is a huge sum of money that you have to pay upfront if you want to be able to buy that home.
This will also dictate just how much your monthly mortgage is going to be until you pay the house off in full. Many people already struggle to come up with a down payment for a normal house, let alone a million-dollar home.
The average down payment amount for a million-dollar home is $214,000, though this is on the lower side. If you are competing with other buyers to get that house, they will most likely be able to outbid your offer.
Affording the down payment is just the first financial investment that you have to make, as a down payment of that size results in a high monthly mortgage. You will most likely have to pay around $4,220 a month at that down payment amount until the mortgage is paid off.
This is a huge financial investment that most people do not have access to in their finances. This is why million-dollar homes are not the normal homes going up for sale.
You will typically only see these homes in specific places where people earn more money or in higher-end neighborhoods. These are some of the only areas where people could afford a house of this price.
Do You have to be Rich to Afford a Million Dollar House?
You may look at these million-dollar homes and think that you have to be rich, but that isn’t always the case. It is true that you need to be well off to afford a home like this, but you don’t necessarily have to be rich.
There are a collection of things that you need in order to qualify to buy a home like this. That includes things like:
- High credit
- Low debt
- Substantial savings
- Reliable income
- $100K income
These are the things that can help you to get that million-dollar home without actually being rich. This sets you in the upper and high-class range in society, but these people aren’t necessarily rich by most people’s standards.
The thing is that it can be hard to have all of these things at your disposal. You have to be very smart with your money in order to land a high-paying job without having substantial debt or a bad credit score.
You will not only need to target any debt you have and pay it off, but you also need to have substantial savings put away. Making sure your job is reliable, and your income stable is also very important.
The last thing you want is to get a million-dollar home with a mortgage rate of around $5,000 only to not end up having the income to cover it. You need to think ahead and make sure you have an income that will remain stable for years to come.
Do You Have to be a Millionaire to Afford a Million Dollar Home?
Many people may look at these magnificent million-dollar homes and assume that only a millionaire could afford them. The nice thing is that many people could afford a million-dollar home with the right finances.
You don’t have to actually be a millionaire to live in a million-dollar home. That would help significantly and allow you to put down a much larger down payment, but it isn’t necessary when buying this kind of house.
With good finances and a history of being reliable and making your payments, you could buy this kind of house with a $100K income. This is on the lower end, but it is possible and would allow you to get into one of these beautiful homes.
On average, people who buy million-dollar homes make an income of around $225K per year. This helps them to afford this kind of house even if they don’t have impeccable finances or a great credit score.
If you want to be able to buy a million-dollar house, you have to look at the details. Can you afford the mortgage payments? Is our credit score good enough to get a loan, and do you have enough for a down payment?
Is a Million Dollar Home a Mansion?
Many people assume that a million-dollar house is going to be considered to be a mansion. The reality is that a million-dollar home typically falls just a little short of actually being called a mansion.
A mansion is defined in technical terms as being at least 5,000 square feet, though they are often much larger. They often sit on large areas of property and have all kinds of features that regular homes don’t have.
While a million-dollar home is typically going to be 3,000 to 4,000 square feet and no larger. If it were to be larger than that, it would end up going far above being just a million dollars.
So,e people refer to million-dollar homes as being McMansions since they are just a bit too small to be called a real mansion. They are the perfect size for many upper-class people looking for a larger-than-average home who can afford this luxury.
Actual mansions will be more expensive, averaging $2 million to $750,000 for a mansion of the typical size. Though the price range could go through the roof depending on the features of the home and just how large it is.
This is one of those things where there is no limit to how much it can be as mansions can become unimaginably expensive.
How Can Someone Afford a Million Dollar Home?
Someone could afford a million-dollar home by having an above-average income that puts them in the top percentage of most earners. It also helps if they have a partner who also makes an above-average income.
Most people could consider buying a million-dollar home if they earned at least $100K a year. Though this depends on how good their finances are and if their credit score is high enough to show that they are trustworthy.
You also need to make sure that you can afford the monthly mortgage payments as they will be very high. Especially if you could not put down a significant down payment to help make the mortgage payments lower.
There are several things that you need to consider, though you don’t necessarily have to be rich to own a million-dollar home.