What is the average salary that a person earns if they are living in a $1,000,000 house?

Question

What is the average salary that a person earns if they are living in a $1,000,000 house?

Answer 1

One approach to this would be to use the classic mortgage underwriting rule of thumb, which generally held that a person's Principal, Interest, Taxes and (PMI) Insurance should be no more than 25% of their gross income.

To calculate the income for a home worth 1,000,000 you would get a PITI number using a mortgage calculator, and divide that number by .25 to get the income necessary to afford the mortgage.   If the mortgage is $800,000 the P&I would be about $4,800 a month   Add $20/1000 in value for property taxes and no PMI because its 20% down, and you would get a monthy PITI of about $6130.  So according to the old school affordability measure, you would need income in the $300,000 a year range.   A more modern rule of thumb is to not buy a house that costs any more than 4 times your annual income.  So in this case, that would be about $250,000

But depending on where the house is located, and what quality of homes are available at various price ranges, you will see widely different incomes paying $1,000,000 for a house.