BreakThru Realty

How Much Income Do You Need to Buy a $500,000, $750,000 or $1 Million Home in Florida?

Reviewed by Tyson E. Sam, Founder and Broker of Record, BreakThru Realty, Florida License 3565210

The Short Answer

There is no single income for a price, because lenders qualify you on the full monthly payment, and in Florida that payment includes property taxes, homeowners and often flood insurance and association dues, which vary widely from one home to the next at the same price. The method is the same at every price: the lender adds the principal and interest at today's rate to the taxes, insurance and dues for that home, then checks that the total plus your other debts fits within its debt-to-income limits. Consult a mortgage lender for the figure that applies to you; this guide shows how they get there and what moves it.

How Lenders Work It Out

A lender looks at your gross monthly income and your monthly debts. The housing payment they test is the loan's principal and interest at the rate you are offered, plus the home's property taxes, the homeowners insurance, flood insurance where the home needs it, mortgage insurance if your down payment is under twenty percent on a conventional loan, and association dues. Conventional programs commonly allow total debts up to the mid-forties percent of gross income for well-qualified borrowers, and FHA loans sometimes more; the lender's limits and your credit decide. Consult a mortgage lender rather than a calculator for your case.

Why the Same Price Needs Different Incomes

Two Florida homes at the same price can carry very different payments. One is a newer house inland with a low insurance premium and no dues; the other is an older waterfront home with a high windstorm premium, flood insurance and a seawall to maintain, or a condo with substantial dues. Property taxes also reset to the purchase price the year after you buy, so the seller's tax bill understates yours. Price the payment, not the price.

The Down Payment Changes the Answer

A larger down payment means a smaller loan and payment, and at twenty percent down on a conventional loan the mortgage insurance drops away. At the three price points in the question, a buyer with twenty percent down needs materially less income than one with five percent down, because the loan is smaller and there is no mortgage insurance. Jumbo loans, which many $1 million purchases need, have their own down payment and reserve requirements. The guide on how much money you need to buy covers the cash side.

A Way to Estimate It Yourself

Ask a lender for the monthly principal and interest on the loan amount you would need at today's rate; add the property taxes based on the purchase price and the local millage, an insurance quote for that specific home, and the association dues; then divide the total housing payment by the share of income the lender allows for housing. That gives the gross monthly income the home needs, before your other debts. The mortgage calculator on this site does the first step; the lender does the rest.

What Helps If the Number Is Tight

A larger down payment, paying down a car loan or card balance before applying, a co-borrower's income, a seller or builder credit that buys down the rate, choosing a home with lower insurance or no dues, or a down payment assistance program if you qualify. The homebuyer programs pages list the Florida programs; a lender approved for them confirms eligibility.

Buying With a BreakThru Agent

We show you the full monthly cost of each home you are considering, with the real tax reset and an insurance quote rather than the listing's estimate, so the home you fall for is one you can comfortably carry. The lender sets what you qualify for; we make sure the homes you tour fit it.

Talk It Through With a Broker

Every purchase is its own set of numbers. Tell us what you are looking for and a BreakThru agent will walk you through the costs, the contract and the homes that fit. Talk to a BreakThru agent · Search homes for sale

How Much Income Do You Need to Buy a $500,000, $750,000 or $1 Million Home in Florida?: Questions

How much income do I need to buy a $500,000, $750,000 or $1 million home in Florida?
There is no single income for a price, because lenders qualify you on the full monthly payment, and in Florida that payment includes property taxes, homeowners and often flood insurance and association dues, which vary widely from one home to the next at the same price. The method is the same at every price: the lender adds the principal and interest at today's rate to the taxes, insurance and dues for that home, then checks that the total plus your other debts fits within its debt-to-income limits. Consult a mortgage lender for the figure that applies to you; this guide shows how they get there and what moves it.
Is there a rule of thumb for income to home price?
Rules of thumb ignore Florida's taxes, insurance and dues, which can double the gap between two homes at one price. Price the full monthly payment with a lender instead.
Do property taxes change after I buy?
Yes. The assessed value resets to the purchase price the year after you buy, so your tax bill is usually higher than the seller's. Lenders qualify you on the new figure.
Does a condo need less income than a house at the same price?
Not necessarily. Association dues are part of the payment lenders test, and in many buildings they are substantial. Compare the full monthly payment of each.

More for South Florida Buyers