What Would My Monthly Payment Be on a $1,000,000 House?

Once upon a time, buying a million-dollar home seemed like something only a mogul could do. But in some parts of the country where home prices remain stubbornly high, you may have to fork over $1 million or more for a pretty average house. A recent Zillow analysis found that a "starter home" (defined as being in the lowest one-third of homes in terms of price for the area) cost at least $1 million in 237 cities in the U.S.

Wondering what your mortgage payment would be on a $1 million house? Let's break down the numbers.

Getting a mortgage on a $1 million home

To finance a $1 million home, you may need a jumbo loan. These are loans that exceed the annual limits set by the Federal Housing Finance Agency (FHFA). In 2024, these limits are $766,550 for a single-family home in most parts of the U.S., or $1,149,825 in Alaska and Hawaii.

Jumbo loans aren't especially unusual, given the soaring costs of housing. However, they typically have stricter underwriting rules. You'll need a solid credit score (usually 680 or higher) and debt-to-income ratio, healthy cash reserves, and predictable income.

You can also expect to put more money down. Jumbo lenders typically require a down payment of at least 10%, though some have minimums as high as 20% or 30%.

What's the monthly payment on a $1 million house?

In our calculations, let's assume that you make a 20% down payment on your million-dollar home and finance the remaining $800,000. We'll also assume you get a fixed-rate mortgage, so your interest rate won't change during the life of the loan.

If you opt for a 30-year fixed rate mortgage: If you took out an $800,000 loan at 7% APR, which is fairly typical for a 30-year mortgage in our current high-rate environment, your monthly payment would cost about $6,046 per month. Your payment would break down as follows:

• $5,322 for principal and interest
• $658 for property taxes
• $66 for homeowners insurance

If you opt for a 15-year fixed rate mortgage: If you took out a 15-year $800,000 loan at 5.5% APR, your monthly payment would be roughly $7,261. Your monthly payment would break down as follows:

• $6,537 for principal and interest
• $658 for property taxes
• $66 for homeowners insurance

In our example, we used a ZIP code in Tampa, Florida. Property taxes and homeowners insurance are typically included in a mortgage payment, but these costs vary widely depending on where you live. If you buy a home in a community with a homeowners association, you'll also be on the hook for dues.

Can you afford a million-dollar home?

You may be wondering whether you should buy a home now or wait, especially if you live in an area where pickings are slim in the $1 million-and-under range. Many would-be borrowers are also holding their breaths in hopes that the Fed will cut the federal funds rate when it meets in September.

The truth is, though, that no one has a crystal ball for the housing market. Instead of trying to predict where home prices are headed or what the Fed will do, let your financial situation determine whether you can afford to buy.

One good rule of thumb (and a common guideline lenders follow) is that your housing payment shouldn't exceed 36% of your income, while total debt payments shouldn't be more than 43%.

In other words, if your income is $10,000 per month, your housing payment shouldn't exceed $3,600. But if, for example, you're already paying $2,000 per month for credit card and car payments, you'd want to limit your monthly housing payment to $2,300 -- since the $2,300 housing payment plus your $2,000 debt payment would put you at the 43% threshold.

If you're on the fence, crunch the numbers on what you'd pay for rent. In many parts of the country, you may be better off renting instead of buying.