How Much Do I Need to Make to Afford a $700,000 House in California?

You asked me this question more than any other. On Instagram, in my DMs, at open houses. “Dat, how much do I need to make to buy a $700,000 house?”

Here’s the straight answer: about $185,000 a year — with 10% down, at today’s rates, using the share of income I see on most real approvals.

But that number changes a lot depending on your down payment and which ratio you use. So I’m going to show you the whole math. No calculator that hides the assumptions. You can check every line.

The full monthly payment on a $700,000 house

Most calculators show you principal and interest and stop there. That’s not your payment. Your payment is principal + interest + property tax + homeowners insurance + mortgage insurance. Here’s all of it, with 10% down:

Rate source: Freddie Mac Primary Mortgage Market Survey, November 5, 2026 — 30-year fixed averaged 7.18%. California property tax uses the Proposition 13 effective rate of about 1.25% (1% base plus local bonds). Insurance at 0.5% of value is a planning figure — if you’re in a fire zone on the FAIR Plan (California’s last-resort fire insurance), it can be much higher, and that changes the answer.

So what salary does $5,551 a month require?

Lenders don’t look at the payment alone. They look at how much of your pay the payment eats. They call it your debt-to-income ratio — the share of your gross pay (your pay before taxes) that goes to debts. They count it two ways: housing only, and housing plus every other debt on your credit report. The second one is the one that actually limits you.

Forget the ratio language. Think in dollars. For every $100 you bring home before taxes, how much is already promised to debts? That share decides the salary answer, so here are three honest ways to run it on this $5,551 payment:

I’m leading with the 36% number because that’s the one that matches what I see on real approvals. The 28% number is the “sleep well at night” number. Pick the share that matches your life, not the one that gets you the biggest house.

And remember: that table counts housing only. If you have a $600 car payment and $300 in student loans, those debts come out of the same paycheck, and lenders count them. At the 36% share, $900 a month in other debts takes the same room as about $30,000 a year of salary ($900 ÷ 36% × 12). Debts shrink the house you can buy. That’s why I tell buyers to kill the car payment before they shop.

What if you put 20% down?

Twenty percent down saves you $737 a month — mostly because the loan is smaller and there’s no mortgage insurance. But it takes twice the cash. For most first-time buyers, that’s the real trade: the income to carry the payment is achievable, the cash for the down payment is the hard part. That’s exactly what down payment assistance is for.

What if you only have 3.5% down? (FHA)

With an FHA loan at 3.5% down, the payment is actually higher than the 10% down conventional loan — because you’re borrowing more and paying mortgage insurance the whole time:

• Down payment: $24,500
• Loan: $675,500, plus 1.75% upfront mortgage insurance ($11,821) financed in — total loan $687,321
• Monthly payment at 6.94%: $5,881 (P&I $4,545 + tax $729 + insurance $292 + annual MIP $315)
• Salary needed at 36%: $196,032. But here’s the number most articles won’t give you: FHA’s own ceiling is higher. FHA lets up to $56 of every $100 of gross pay go to your debts, house payment included. With no other debts, this payment fits under that ceiling at about $126,000 a year. That’s the lender’s maximum, not a budget I’d recommend — but if someone told you FHA stops at 43%, they were wrong.
• Cash to close: $24,500 down + $14,000–$35,000 closing costs = $38,500–$59,500

The FHA rate is usually lower than conventional (6.94% vs 7.18% here), but the bigger loan and the permanent mortgage insurance eat the difference. FHA still wins for a lot of buyers — just not on the monthly payment. It wins on the cash needed to get in. Full breakdown in my post FHA Loan in 2026: What It Actually Costs Per Month.

The salary table: what your income buys in California

Same assumptions as above — 10% down, 7.18%, housing at 36% of gross pay, CA tax and insurance included:

For context, California’s median home price is about $830,000 (California Association of Realtors, April 2026). At 10% down, that house costs about $6,582 a month and takes about $219,403 a year at 36% DTI. The median California household earns about $96,000. That’s the gap, and it’s real. It doesn’t mean you can’t buy — it means you buy in the county and the price range where your numbers work, or you use assistance to close the cash gap.

My Take

The payment is the price. The house price is just the sticker. Run the full payment — tax, insurance, MI, all of it — before you fall in love with a house.

What to do with this

1. Run your real numbers in the Home Affordability Calculator — put in your actual debts, not the ones you wish you had.
2. If the cash is the problem, read Down Payment Assistance in California: Every Program Worth Knowing in 2026.
3. If your credit is under 680, read FHA Loan in 2026 — it might be your lane.
4. Then start your pre-approval and I’ll run your exact numbers.

Hear me walk through this on the podcast: “How Much House Can I Actually Afford? A Financial Planner Explains” and Episode 29.

Numbers in this post use the Freddie Mac rate from November 5, 2026 and California’s ~1.25% effective property tax rate. Rates move. Your actual payment depends on your rate, your credit, your county’s tax rate, and your insurance. This is education, not a rate quote or a loan approval. Dat Nguyen, NMLS 1379110.