There’s nothing like dreaming big, and a ten million dollar house is some big dreaming. Even so, let’s find out how to afford a $10 million dollar house and what you would have to do, starting today to get one of your own.
While it may seem like a million dollars or more is a lot of money for a house, depending on where you’re living it isn’t a lot at all.
A million dollars might get you a shack in San Francisco or New York City, but if you want to live with style, you better start saving your pennies, so you can afford a 10 million dollar home.
How Much Money Do You Have to Make to Afford a $10 Million Dollar House?
If you are purchasing a ten million dollar house, you have to remember that there are many more expenses than just the mortgage payment, taxes, and insurance.
You will need lawn care which won’t come cheap and you will want someone to clean the house as well.
Chances are, you won’t want to spend your entire weekend cleaning a 10,000 to 15,000 square foot house.
Of course, if this home is in New York City, you might be looking at a four-bedroom condo and not some large estate.
So, let’s break it down.
Let’s say you plan to get a mortgage to buy this property. (A lot of people buying real estate in this price range would pay cash.)
But if you don’t have the full ten million, a mortgage will be necessary.
Most lenders want a 20% down payment, so that means $2,000,000 upfront and in cash.
The remainder would be your mortgage of $8,000,000.
If you can get a loan of this size chances are you have good credit and can get a low interest rate of 3 or even 2 percent.
Combining the mortgage payment and interest you’re looking at around $20,000 a month mortgage payment.
Of course, you will need to add about $10,000 per month for property taxes and maybe another $5,000 to $10,000 a month for maintenance and upkeep.
When all is said and done, you’re looking at around $35,000 per month, not including cleaning staff.
Your monthly housing expenses should be around a third of your monthly income.
That means to afford a 10 million dollar home you would need to make around $1.2 million dollars per year.
That is certainly doable if you are a high-priced doctor or attorney in a large city or own a very successful business.
Who Can Afford a $1 Million Dollar House?
A million-dollar house is easier to obtain for the average person than a ten million dollar home.
Taking the same percentages that we looked at for the 10 million dollar home and reducing them by 90%, you would need to make around $140,000 dollars per year to purchase a million-dollar home.
Of course, you would need to come up with around $200,000 for a down payment first.
Jobs to Afford a Million Dollar House
There are a lot more jobs that you can work to afford a million-dollar home than a 10 million dollar home.
Some of these can include:
- Doctor – midsized or smaller city or even small town
- Attorney – same here
- Business owner
There are most likely countless others, but a million-dollar home is not out of the question for most professional employees.
Income to Afford $2 Million Dollar House
The income needed to afford a $2 million dollar house is just double that of the million-dollar home.
Taking the $140,000 salary and doubling it would make it a $280,000 yearly salary necessary.
You’re also looking at a $400,000 down payment.
How Much Money Do You Need to Buy a $5 Million Dollar House?
Taking the $140,000 yearly salary you need for a million-dollar home and multiplying it by five means you would need about a $700,000 a year salary to afford a five million dollar home.
Keep in mind, that doesn’t include home maintenance, upkeep, lawn care, or cleaning services.
Who Can Afford a $20 Million Dollar House?
When you start talking about a $20 million dollar house or higher, now you are looking at rock stars, movie stars, hedge fund managers, and the truly 1% of the country.
Most small business owners, doctors, and lawyers are not going to be able to afford this level of a house.
How Much House Can I Afford?
If you’re wondering how much house you can afford, it is pretty easy to figure out.
Take what you receive in salary every year and subtract what you pay in income taxes.
You want the net figure not the gross.
The net figure is what you take home after your employer takes all of the deductions out.
So, let’s say you make $60,000 a year. You have $20,000 available for a down payment and you have monthly debt in the amount of $1,000 each month.
Putting all of this into an easy Home Affordability Calculator shows that you can afford to buy a home for $162,000 with a monthly mortgage payment of $800 dollars.
Check out the calculator.
It is free and you can put it in all sorts of different amounts.
So when it comes down to how to afford a 10 million dollar house, you will have to work for it, but it is possible, so keep dreaming.
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