How Much Do You Need To Make To Afford A $1 Million Dollar Home?
A $1 million home is often seen as a symbol of success, but what does it take to make that dream a reality? In South Florida, where luxury and diverse neighborhoods collide, the answer depends on your income, financial preparedness, and understanding of the homebuying process.
In this guide, we’ll explore what a million-dollar home looks like in top neighborhoods, the key financial fundamentals, and how to determine if your income aligns with your real estate goals.
Fundamentals of Buying a Home
When buying a million-dollar home, especially in South Florida, understanding the factors that influence your purchasing power is essential.
- Down payment is the upfront amount you pay to reduce the loan you need. For a $1 million home, the standard 20% down payment equals $200,000, but options with lower down payments may exist.
- Credit score affects your loan eligibility and interest rate. A higher score can lower your costs and increase your buying power.
- Interest rate, the cost of borrowing money expressed as a percentage, significantly impacts your monthly payments and the total cost of your loan.
- Annual income is evaluated by lenders to determine how much you can afford. Ideally, housing costs shouldn’t exceed 28%-30% of your gross monthly income.
- Property taxes vary by county in South Florida and can add significantly to monthly expenses. Research local rates to factor this into your budget.
- Property insurance is essential in South Florida due to risks like hurricanes. Premiums can be high, so prepare for this recurring expense.
What Does a Million-Dollar House Look Like in Different South Florida Neighborhoods?
1. Brickell/Downtown Miami
In the heart of Brickell, this three-bedroom, three-bathroom unit on the 35th floor of 1010 Brickell is listed at $1.15 million. With 1,325 square feet of living space, this residence offers breathtaking views, custom closets, and a chef’s kitchen with top-of-the-line appliances. Brickell is one of Miami’s most desirable neighborhoods, known for its walkability, vibrant dining and nightlife scene, and proximity to the Brickell Financial District. The area attracts young professionals, international buyers, and investors who value the convenience of urban living and the prestige of Brickell’s luxury condos.
Despite Miami’s growing condo inventory, Brickell units remain highly sought after due to their location, modern amenities, and strong demand from both local and global buyers. This residence is ideally situated near Brickell City Centre, public transportation, and a wealth of cultural and recreational options, making it a standout choice in Miami’s dynamic real estate market.
2. Coral Gables
In Coral Gables, this beautifully remodeled three bedroom, two bathroom home listed at $99,999 offers 1,877 square feet of interior living space on a 5,350-square-foot lot. Listed as move-in ready, the home features impact windows, recessed lighting, and an open-concept layout with porcelain tile flooring. The modern kitchen boasts stainless steel appliances, granite countertops, and wood cabinetry, making it ideal for both everyday living and entertaining.
Known as “City Beautiful,” Coral Gables is one of South Florida’s most prestigious neighborhoods, offering a mix of historic charm and modern convenience. This property is perfectly located just minutes from Miracle Mile and the Shops at Merrick Park, where you’ll find upscale dining, shopping, and entertainment. The home is also close to the University of Miami, making it a great option for families, professionals, or investors seeking a prime location in a highly desirable area.
3. Fort Lauderdale
In Fort Lauderdale’s sought-after Riverland Woods neighborhood, this four-bedroom, three-and-a-half-bathroom single-family home is listed at $1,075,000. Spanning 2,671 square feet on a quarter-acre lot, this upgraded home combines luxury and practicality. It features a new 50-year metal roof, impact windows, and high-end finishes throughout. The chef’s kitchen opens to the lush backyard, where you’ll find a heated lap pool with swim jets, astro turf seating and dining areas, and plenty of space for outdoor entertaining.
Fort Lauderdale is renowned for its waterways, boating lifestyle, and vibrant atmosphere, making it a top choice for families and professionals alike. This home’s oversized driveway offers space for an RV or boat, catering to water enthusiasts, while the proximity to downtown Fort Lauderdale, top-rated schools, and beaches makes it an ideal location. With a low HOA and countless modern upgrades, this property offers a perfect blend of comfort and convenience in one of South Florida’s most desirable cities.
4. Palmetto Bay
In the charming community of Palmetto Bay, this beautifully updated three-bedroom, two-bathroom home is listed at $998,900. Offering 1,544 square feet of interior living space on a spacious 0.35-acre lot, this home features an open floor plan with large impact windows that bathe the interior in natural light. The fully updated kitchen is a standout, equipped with a gas stove, wine cooler, modern appliances, and ample counter space for cooking and entertaining.
The expansive backyard is perfect for outdoor living, featuring a heated saltwater pool, a large tiki hut with a high-end outdoor grill by Paradise Grills, and plenty of space for toys, a playground, or additional seating. Palmetto Bay is known for its peaceful suburban appeal, excellent schools, and family-friendly atmosphere. With easy access to parks, shopping, and dining, this property is an ideal retreat for families seeking stylish indoor and outdoor living in one of South Florida’s most desirable areas.
5. Aventura
In Aventura, this stunning and spacious southeast corner condo unit on the 26th floor is listed at $1,090,000. Spanning 2,371 square feet, this residence features three bedrooms (with one converted into an office), 2.5 bathrooms, and breathtaking ocean and intracoastal views from every room. The updated kitchen and baths, recessed lighting, and custom closets create a perfect blend of elegance and comfort.
Known for its upscale lifestyle, Aventura offers proximity to top-rated schools, shopping at Aventura Mall, supermarkets, and cafes, making it a prime location for families and professionals. This building includes impressive amenities such as racquetball courts, a billiards room, party rooms, pools, a fitness center, a sauna, valet service, and 24-hour security. While the building is currently undergoing renovations—including updates to balconies and common facilities—residents can look forward to an updated pool and deck reopening in June 2025. The vibrant community and luxury finishes make this condo an excellent investment in Aventura’s desirable market.
How Much Do You Have To Make a Year To Afford a Million-Dollar House?
Determining how much annual income you need to afford a $1 million home depends on a variety of factors, such as mortgage rates, property taxes, insurance, and your down payment. To help simplify, here are three commonly used rules of thumb:
The 1/3 Rule
This rule suggests that your total housing costs—principal, interest, taxes, and insurance (PITI)—should not exceed one-third of your annual income. Let’s determine how much you need to make to afford a $1 million dollar home using the 1/3 example.
Assuming a 20% down payment, a 6.7% interest rate on a 30-year fixed mortgage, annual property taxes at 2% of the purchase price, and hazard insurance at 0.7% of the loan amount, the total monthly housing expense would be $7,296. This includes:
• Monthly mortgage payment: $5,162
• Monthly Property Taxes: $1,667
• Monthly Insurance Premium: $467
This totals $87,547 annually in housing expenses. Using the 1/3 rule, you would need an annual income of approximately $262,640 to afford a million dollar home while staying financially comfortable.
The 28% Rule
The 28% rule is slightly more conservative and suggests that your housing expenses should not exceed 28% of your annual income. Using the same $87,547 annual housing expense from our earlier example:
Formula:
Income Needed = Annual Housing Example / 0.28
Calculation:
Income Needed = $87,547/0.28 ≈ $312,667.
To follow this rule, you would need an annual income of $312,667 to comfortably afford a $1 million home while keeping housing costs within 28% of your income.
The 2.5x Rule
This rule suggests that the purchase price of a home should be no more than 2.5 times your annual income. For a $1 million home:
Formula:
Income Needed = Purchase Price/2.5
Calculation:
Income Needed = 1,000,000/2.5 = $400,000
Under this guideline, you would need an annual income of $400,000 to afford a $1 million home while maintaining financial stability.
Which Rule Should You Follow?
Each rule offers a helpful perspective, but your unique financial situation should guide your decision. Consider factors like existing debts, savings, and lifestyle when evaluating your affordability range. For personalized guidance, Vaster’s lending experts can help you calculate realistic affordability and explore financing options tailored to your needs.
Other Factors To Consider When Determining Home Affordability
When considering a million-dollar home, it’s important to account for additional costs beyond the purchase price. These factors can significantly impact your affordability and long-term financial commitment:
- Credit Card Debt: High credit card balances increase your debt-to-income ratio (DTI), which can make it harder to qualify for a mortgage. Lenders typically prefer a DTI of 36% or less, including your proposed mortgage payment.
- Closing Costs: Buying a home involves more than just the down payment. Closing costs, such as loan origination fees, appraisal fees, and title insurance, can add up quickly. For a million-dollar home, these costs can range from 2% to 5% of the purchase price, amounting to tens of thousands of dollars.
- Loan Limits: For homes priced at $1 million, you’ll likely need a jumbo loan. These loans exceed the conforming loan limits set by Fannie Mae and Freddie Mac and often come with stricter qualifications and higher interest rates.
- Private Mortgage Insurance (PMI): If your down payment is less than 20%, you’ll be required to pay PMI. This insurance protects the lender if you default on your loan and can add a notable amount to your monthly payments.
- HOA Fees: Many upscale neighborhoods and condominiums charge Homeowners Association (HOA) fees to maintain shared spaces and amenities. These fees vary widely but can add hundreds or even thousands of dollars to your monthly housing expenses.
Your Partner in Luxury Home Financing
Purchasing a million-dollar home is a significant financial commitment that requires thoughtful planning and a clear understanding of factors like your income, credit score, loan options, and the additional costs of homeownership.
Navigating the homebuying process in a competitive South Florida market can feel overwhelming, but the right partner makes all the difference. At Vaster, we specialize in tailored financing solutions for high-value properties in South Florida, offering local expertise and streamlined support to help you succeed. Ready to make your dream home a reality? Take the first step and secure a courtesy closing cost estimate with a Vaster loan originator.
Sources:
What are Mortgage Closing Costs? | NerdWallet
Debt-to-Income (DTI) Ratio: What's Good and How To Calculate It | Investopedia
Jumbo Loans: What You Need to Know | NerdWallet
What Does Debt-to-Income Ratio Mean for Mortgage Borrowers? | Business Insider
How to Improve Your Credit Score Fast | Investopedia
What Is the Average Down Payment on a House in 2023? | Time
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