Once upon a time, very few people would imagine owning million-dollar homes. Thanks to rising housing markets around the country, however, $1 million is no longer the upper end of the price ranges you’ll discover when hunting for top houses. Truth be told, if you want to live in a five-star property in places like New York City, Los Angeles, Miami, or San Diego, $1 million is at the lower end of what you would be expected to pay.
However, in the more affordable states, with generous tax laws and growing economies, some million-dollar homes are more attainable than one might think. Today, let's take a look at how much money homebuyers should save up and earn before purchasing a million-dollar house in any city.
What Does a Million-Dollar House Look Like in Different Florida Cities?
1. Miami
If you want to live close to the water, take a look at this one-bed, one-bath condo with ocean views. The recent top to bottom remodel brought a light, airy, and elevated quality. This Miami-Dade County high-rise offers private beach access, a heated pool, BBQ areas, and party rooms. With 24-hour security and valet parking, it feels like an upscale hotel.
For slightly over one million dollars, a two-story townhome in Coral Gables, Florida, is over 2,000 square feet of luxury living. It has three bedrooms and 2.5 bathrooms. There’s a patio/deck, a walk-in closet in the master bedroom, and state-of-the-art appliances and upgrades.
In the Downtown Miami/Brickell area, this two-bed, two-bath corner unit is on the market for just under a million dollars. The views of Miami and upgraded luxury features are what you’d expect from this SLS LUX condo. Enjoy amenities like an indoor gym, sauna, two pools, and concierge. The game room, mini golf course, and children’s playroom add to the sense of fun. The Brickell Financial District location offers the best of restaurants, bars, groceries, bars, and more.
For investment properties or starter homes, consider this house in Coconut Grove (one of Miami’s original neighborhoods) is priced at $975,000. It has three beds and three baths for a total of 880 square feet on a 6,000-square-foot lot. The location is amazing — close to shopping centers, excellent schools, and charming restaurants. It’s a wonderful opportunity to own a residence in a historic neighborhood.
2. Tampa
In the Bayport community of Tampa, you’ll find homes like this two-story four-bed, three-bath house for a total of 2,334 square feet. This property has over 200 feet of direct waterfront access that can be seen on both sides of the house. The bathrooms and kitchens are renovated with stunning luxury tile and high-end marble, and the floor is Brazilian cherry. The pool is solar-heated, and the property comes with a dock and boat slip with a 16-thousand-pound boat lift.
3. St. Petersburg
Compared to Miami, one million dollars gets you a lot more in St. Petersburg, Florida. For $1,089,000, you can get this four-bed, two-bath, attached two-car garage house in the waterfront Bayway Isles community.
This 2,428-square-foot Mediterranean-style home sits behind a stately semi-circular driveway. It has a pool, stone fireplace, covered lanai, and multiple water features.
4. Sarasota
One million dollars can get a house like this three-bed, three-and-a-half-bath house in Downtown Sarasota. This house is over 3,400 square feet and has a formal living and dining room and a kitchen with a coffee bar.
The gorgeous arched entryways complement the Saltillo tile floors that run throughout the house, including the spacious office. Look through the 16 sliding glass doors to the saltwater pool and mature landscaping. New additions were designed by Sarasota’s famous Jerry Sparkman.
5. Fort Myers
For $1,150,000 in Fort Myers, you might like this mid-century bungalow. The 1,920 square foot, two-bed, two-bath house sits on .27 acres right off the Historic McGregor Blvd. It’s a riverfront property — perfect for those moving to Florida to take advantage of the sun.
In 2022, it got an entirely new roof, and the original terrazzo floors from 1965 were uncovered. This concrete block house is near the Fort Myers Downtown River District for the best of local culture.
6. Naples
If you move to Naples, you might enjoy a four-bed, three-bath, 2,756-square-foot house like this one on Cypress Hollow Way. Watch the sunset from the recently re-fenced lanai as you float in the pool or rest in the two-person porch swing. There’s also a mother-in-law suite with a separate entrance.
7. Orlando
In Orlando, a four-bed, three-and-a-half bath fully-updated Colonial house like this costs $999,999. The 2,629-square-foot house in College Park was built in 1928. It’s full of natural light and has custom cabinets and fully renovated bathrooms. The meticulously maintained landscaped yard is also home to a one-bed, full-bath carriage house for family, friends, or a possible rental investment property.
How Much Do You Have To Make a Year To Afford a Million-Dollar House?
A million dollar price tag is not uncommon if you're in the market for a large family home in Orlando or even a modest home in Miami. When it comes to how much you need to make a year to afford a million dollar home, that can vary depending on several factors including mortgage rate, down payment amount, property taxes, insurance and more.
Using Vaster's mortgage calculator can help you get a better idea of what income you will need to afford a million-dollar property in 2023. For our example we will be assuming the following:
- Down payment is 20%
- Interest rate is 7.5% for 30-year fixed rate mortgage
- Annual property taxes is 2% of purchase price
- Annual hazard insurance premium is 0.7% of loan amount
With the above factors incorporated, your monthly housing expense will be $7,727, this equals to $92,724 per year on principal, interest, taxes, and insurance. Using the common rule of thumb that you should not spend more than a third of your income on housing, we will multiply this figure by 3. Therefore, the annual salary needed to afford a $1M dollar home is $278,172.
Other Factors To Consider When Determining Home Affordability
1. Debts
If you are a “prime borrower” — that is, you have very low pre-existing monthly debts and an excellent credit score — your income can be on the lower end.
Still, you might qualify for a mortgage loan for a one-million-dollar home even if you have a high DTI. If you have extra debts, you'll need to prove to the lender that you are going to pay for everything. In that case, expect to need an income likely over the projected analysis. The same goes if you have a low credit score.
Lenders also consider your debt-to-income ratio (DTI), which compares your monthly debt obligations to your gross income. A lower DTI is generally preferred. Most lenders prefer a DTI of 43% or less (closer to 35% is ideal), including your mortgage payment and other debts. Luckily, with work and care, it is possible to lower your debt-to-income ratio, as explained by Business Insider.
2. Credit Score
Your credit score will affect your interest rate as well. If you have a high credit score, you’ll be more likely to qualify for a prime loan compared to if you have a very low credit score. That said, most lenders will want to see a credit score between 620 to 680 in order to approve a mortgage for a $1 million dollar home purchase. Check out this article from Investopedia on how to raise a credit score.
3. Interest Rates
In addition to the down payment, you’ll want to consider the interest rate for the mortgage loans you may qualify for.
For many $1 million home mortgages, interest rates currently hover between 7.5% and 8% or higher. Most are around the 7.5% range. A lower interest rate is always ideal, but various financial factors about your credit history will affect the interest rate you secure.
For instance, if you have a low DTI or debt-to-income ratio, you'll be much more likely to secure a mortgage loan with a low interest rate. That's because your lender will trust that you'll be able to pay for your mortgage plus interest consistently without struggling for income. The DTI accounts for your household income, your credit card debt, existing mortgage interest, and any other impacts on your net worth.
Your income itself will also affect your mortgage rate. When you apply for a big mortgage loan, such as a mortgage for a $1 million property, the lender might want to know your yearly income. If your income is over $200,000 or even more, you'll be more likely to secure a low interest rate.
Bottom line: It’s important to consider the interest rate for the mortgage loan, which is affected by factors such as your credit history, debt-to-income ratio, income level, and credit score. A low interest rate is always ideal, but it's essential to do your research and consider the financial factors that may affect the interest rate you qualify for.
4. Property Taxes
Property taxes are recurring fees imposed by local governments on property owners. They are based on the property's assessed value and are used to fund public services and infrastructure. In Florida, property taxes play a significant role in revenue generation due to the absence of state income tax, making them a crucial aspect of homeownership expenses in the state. The median rate of Florida property taxes is 0.89%.
However, property taxes vary by municipality, and in most major cities in Florida, the tax rate is closer to 1%. In Florida, you property taxes will also be reassessed on the following January 1st after purchase date. As a home buyer, a good rule of thumb is to assume annual property taxes will equal 2% of the sales price.
5. HOA and CDD Fees
Homeowner's association (HOA) fees are regular payments made by homeowners in a community with shared amenities or common areas. These fees typically cover maintenance, repairs, and management of the shared spaces.
In Florida, where many residential communities have HOAs, these fees often provide access to amenities such as pools, gyms, and landscaping services, contributing to residents' overall quality of life since the state has well over 200 sunny days a year.
Forty-five percent of Florida homes are part of an HOA — more than anywhere else in the United States for an average of $389 a month. This number should factor into your budget. When it comes to resale, homes that are in HOAs are worth about 13 percent more than those that aren’t.
Unlike private HOAs, a Community Development District (CDD) is like a government organization that takes care of important things in a community. They help pay for and look after things like roads, parks, and utilities. They do this by collecting money from the people who live in the community through fees or assessments. This way, they can make sure the community has everything it needs to be a nice place to live.
Finance Your Million-Dollar House With Vaster
Even if you already have enough money to afford a $1 million home, you may not know where to find the perfect mortgage. Vaster can help. With our expertise in mortgage lending, we offer various loan options tailored to your needs. Whether you're a first-time buyer or seeking to refinance, Vaster provides valuable guidance and competitive rates, helping make your dream of owning a luxury home in Florida a reality.
Our knowledgeable loan officers can connect you to the best conventional loan or jumbo mortgage for your requirements, so inquire about a preapproval today.
Sources:
45% of Florida homes are part of an HOA, the highest percentage in the nation | South Florida Agent
What your salary needs to be to afford a $1 million home | Yahoo Finance
Property Taxes by State | World Population Review
What Is the Average Down Payment on a House in 2023? | TIME Stamped
Your debt-to-income ratio is crucial to getting approved for a mortgage — here's how to calculate yours | CNBC
How to Afford a Million-Dollar Home: Salary, Mortgage, & Costs | Clever
How to Improve Your Credit Score Fast | Investopedia
What is debt-to-income ratio? | Business Insider
