---
title: 'Who Can Afford a $250K, $500K, $1M, and $2M House in 2026?'
source: 'https://youtube.com/watch?v=_wFDfFXo8bQ'
video_id: '_wFDfFXo8bQ'
date: 2026-08-05
duration_sec: 814
---

# Who Can Afford a $250K, $500K, $1M, and $2M House in 2026?

> Source: [Who Can Afford a $250K, $500K, $1M, and $2M House in 2026?](https://youtube.com/watch?v=_wFDfFXo8bQ)

## Summary

This video analyzes the affordability of homes priced at $250K, $500K, $1M, and $2M in 2026, considering current 6% mortgage rates and a median home price of $400,000. It explains the 28/36 rule and a more conservative 30% net income rule, then calculates the required salaries for each price point.

### Key Points

- **Introduction to 2026 Housing Affordability** [00:01] — The video updates a housing affordability analysis from three years ago, noting 6% mortgage rates and a median home price of $400,000.
- **The 28/36 Rule Explained** [00:39] — The 28/36 rule states that mortgage payments (including taxes and insurance) should be 28% of gross monthly income, and total debt payments should be under 36% of income. It's a lender's guideline, not a personal affordability measure.
- **Better Rule: 30% of Net Income** [02:11] — A better framework is to keep total housing costs (mortgage, taxes, insurance, HOA) under 30% of net income (take-home pay), as gross income can be misleading.
- **Outdated Rules and Personal Calculation** [03:30] — Rules like the 30/33 rule (home price ≤ 3x annual income) are outdated, especially in high-cost areas. It's essential to run your own numbers based on net income and actual expenses.
- **$250K House Affordability** [04:24] — With 20% down and 6% mortgage, monthly payment is ~$1,600. Bank's 28% rule requires ~$68.5K gross, but 30% net rule suggests ~$85K gross for comfort.
- **$500K House Affordability** [06:21] — Requires $100K down, monthly payment ~$3,000. Bank's rule needs ~$128.5K gross, but 30% net rule suggests ~$160K gross (household income).
- **$1M House Affordability** [08:36] — Requires $200K down, monthly payment ~$6,000. Only top 5% of households can afford. Bank's rule needs ~$257K gross, but 30% net rule suggests ~$320K gross.
- **$2M House Affordability** [10:59] — Requires $400K down, monthly payment ~$12-13K. Only 2% of households can afford. Bank's rule needs ~$514K gross, but 30% net rule suggests ~$700K gross.
- **Takeaway: Required Incomes** [12:38] — To comfortably afford: $250K house needs ~$85K/year, $500K needs ~$160K/year, $1M needs ~$320K/year, $2M needs ~$700K/year. Most Americans don't earn these amounts.

### Conclusion

The video emphasizes that housing affordability in 2026 is challenging, with a significant gap between typical incomes and required salaries for higher-priced homes. It encourages viewers to run their own numbers based on net income to make informed decisions.

## Transcript

2026 is a little bit uncomfortable because when you actually run the numbers on what a salary would afford a 250k, 500k, 1 million, or 2 million a hard time. Today, we're going to go
over how much of a house you can afford based on those home prices. So, this is an updated version of the video on housing I made almost 3 years ago now, dramatically. We now have 6% mortgage
rates, and the median home price is at around $400,000. Now, the math has let's actually run the numbers through each of those houses. But before we do that, we actually need to cover a common rule of thumb when it comes to buying a
home, and that's actually called the 28/36 rule. This is the classic rule tell you it's all about affordability, but rather I think it's more used to see states that your mortgage payment,
including your taxes and insurance, should be 28% of your gross monthly income in order to qualify for a mortgage. So, if your household makes 100k per year, that means your gross salary is around $8,333
per month. If you multiply that by 28%, you should get $2,333 per month. That is the monthly mortgage amount that lenders would be okay with giving you. Now, the reason you should be cautious of this rule is that it
cost, HOA fees, utilities, or other home ownership expenses. It just tells the bank whether or not they're probably going to get paid back. The and 36 part mortgage payments and all your debts,
student loan payments, or credit card payments, all those will get added payment. Then, your total number of debts divided by your income needs to be less than 36% of your total income in order for you to get approved for a
something here. Just because you are approved for a mortgage doesn't mean it's affordable in your situation. Mortgage lenders aren't really in the business of caring if you have enough money left over to save for retirement.
going to get paid back or not. So, we can use this rule, the 28 and 36 rule, the ultimate determinant of affordability. A better framework, I keep your total housing costs, which include your mortgage payment, your
property taxes, your insurance, and HOA if you have one, you want to keep that under 30% of your net income. That's your take-home pay, aka the money that actually hits your bank account. Net, in my opinion, is a way better rule to use
than gross because gross income creates delusions. You may think that your household is making $150,000 per year, but in reality, you're only taking $100,000 per year, and your budget should be based on what you actually
take home. Now, 30% of net is a target, not a guarantee. So, in some markets, especially on the coasts, even hitting 30% net requires a household income that of the uncomfortable point of this video. Before we get into the salaries
that allow you to afford the different types of homes in today's video, here's my honest opinion. When it comes to affordability, you need to run your own something to look at, but they don't really matter as much to what you
should look at your net income and factor in what a reasonable amount for utilities, property taxes, maintenance, etc. Some people's net income is going to be wildly different than another person's net income because someone
maxing out their 401k at $23,500 per year is going to have a much lower nothing. And in that scenario, they could be making the exact same salary, completely different. of calculators online are going to make assumptions for
you that may or may not be true, and some of the rules of affordability are little bit outdated. For example, the 30/33 rule of home buying states that home, and that you shouldn't buy a home that is more than three times your
annual income. This was actually the exact rule that I discussed in my video that a lot of people in the comments said, "You're rarely going to have a 30% would actually agree, especially if you live in a high cost of living area, it's
almost going to be impossible to save 30% down payment right off the bat 10 years. And it's also going to be slightly impossible to find a home that is less than three times your annual income. So, what I ultimately want you
you run the numbers yourself, you will feel the most comfortable about what a home actually costs you. Now, the best way to illustrate how much a home will numbers. So, let's first look at a $250,000
house. See what it might cost you on a monthly basis, that way you can calculations. All right, so starting with a $250,000 house, we are going to assume a 20% down
payment and a mortgage rate of 6%. So, to start off, you will need at least house. Now, if you don't have that, you can consider something like a 10% down payment, which is $25,000. But be careful, anything under a 20% down
payment will require you to pay PMI, which stands for private mortgage insurance. That's insurance that you pay, but it actually protects the lender and not you. So, it actually protects the lender in case you stop making
payments. You personally get nothing out of PMI, it's just an extra monthly cost equity. All right, so let's pretend you put 20% down, that means you're financing $200,000 at 6% interest rate over 30 years. This gives you a
principal and interest payment of roughly $1,199 per month, so $1,200. And insurance, you're probably looking at $1,500 to $1,700 a month all in, depending on where you live. Let's use $1,600 a month to be conservative here
and split the difference. That means based on the 28% rule of affordability, about $5,714 per month, or about 68,500 per year. Remember though, that's the bank's rules. So, based on my 30% net income
than that. Assuming you take home roughly 75% of your gross pay after roughly 75% of your gross pay after taxes, you need about $5,333 in net income per month, which works out to a gross salary of around 85k per
year. So, the bank says that you can do this on $68,500, but to actually live comfortably, save, invest, not stress about your home payment, you're probably looking at needing closer to 85k in gross salary to
comfortably afford a $250,000 house. So, if you were running the budget for yourself, I would use something between $1,500 and $1,700 a month in your estimates, and if you have any HOA fees, PMI fees, etc., you want to add those in
as well. All right, so that was the 250k house. Now, let's double it and look at house. Now, let's double it and look at a $500,000 house. So, a $500,000 house in America is about $100,000 more than the median priced home in America as of
early 2026. In most regions, you can probably find something nice to live in something like this house right here in Raleigh, North Carolina. It's actually pretty nice, four bedrooms, three bathrooms for $500,000 and 2,000-ish
square feet. So, let's use the same assumptions here, 20% down, 6% mortgage $100,000 in cash just to get to the table. That would be the down payment, and that's a significant milestone that a lot of households simply haven't hit
median savings in America is around $8,000. That means a lot of the people who are able to afford a $500,000 house, especially if they're on the younger family money or an inheritance, or perhaps they're already a dual income
With 20% down though, you're financing $400,000 at 6% over 30 years, and that gives you a principal and interest payment of roughly $2,400 per month. Add in property taxes and insurance, and you're looking at $2,800 to $3,000 per
month all in. Let's use $3,000 a month as our working number, and remember, especially if you're in a higher tax state like California, Illinois, or New higher end of that range as well. Based on the 28% gross rule from banks, you
need a monthly gross income of about $10,714, or roughly $128,500 per year in gross salary. Now, based on my 30% net rule, assuming a 75% take-home pay from your gross salary,
you need about 10k in net income per month. 10k in net income per month is the equivalent of around $160,000 per year on a gross basis. So, I think that's already pretty crazy. A $500,000 house requires $10,000 in net income per
month if you want to stay under the 30% net rule. A lot of people won't be able to do this on their own, so this is most likely going to be a household income at this point, so two incomes under one house. It still might be a stretch for a
both have to pull in at least $80,000 per year, and you still have to really take note of all of your other expenses. All right, so that was the $500,000 house, but let's talk about the million dollar house now because your million
aspirational price points, especially if you live on the coasts. For example, if York, San Francisco, Miami, etc., this is a very interesting price point for really common across all those cities and regions. A million dollars in a
lower cost of living area is going to be a mansion, but in a lot of these cities just a regular house. And if you live in San Francisco like me, dollars will get you 838 square feet in the form of a condo. All right, so 20% down means that
even get a mortgage. You're going to be financing $800,000 at 6% over 30 years, which gives you a rough principal and interest payment of $4,796 per month. If you add in property taxes and insurance on a home at this price
point, you're looking at between $5,800 and $6,300 a month all in. So, today number. So, here's where it gets a National Association of Home Builders data, only about 6.9 million US
households have enough income to afford the million dollar house. That's out of 134 million households total, so we're talking about the top 5% here when we're talking about affordability. Based on the 28% gross rule from the banks, you
need around $257,000 per year. Now, based on my 30% net rule, assuming the 75% take-home pay as well, you need about $20,000 in income per month, which works out to a gross household income of around $320,000 per
year. Now, that was based on a 25% effective tax rate. If your effective your gross household income should be a little bit more, maybe 350k, 360k, etc. at this price point in most parts of the country, you're going to need a jumbo
loan since the conventional conforming loan limit in 2026 is around $832,000. Jumbo loans typically require stronger credit, larger cash reserves, and often rates. So, the bar to qualify is slightly higher than your standard
mortgage. So, again, if we were to use $6,000 a month as your budget, can you actually afford this? If you and your partner are taking home, say, $12,000 a stretch, but if you're making, say, $15,000 a month and you get stock option
bonuses every quarter that average out to $2 to $5,000 per month, then maybe the million-dollar house. Let's look at the $2 million price range right now. At a $2 million price point, we're talking about a very small portion of people
buying these homes, contrary to what social media wants you to believe. Only about 2% of all American households have enough income to even afford a house at numbers. For 20% down, you would need about $400,000 in cash, which is crazy,
and you would have to take out a loan of $1.6 million. That means your principal and interest payments alone come out to $9,593 per month. That's almost 10k a month. Once you add in taxes insurance and even
higher maintenance costs or HOA costs, you might be looking at around $12 to $13,000 a month really easily. Based on the 28% rule, you need a household the 28% rule, you need a household income of on my personal 30%
around $40,000 in take-home pay every single month. That translates to a gross income of $700,000 per year to stay comfortable using a tax rate of 32%, making more money. So, not many households or people make $700,000 per
year. You might need two incomes working very high-paying jobs, like perhaps both people are finance or both doctors or lawyers or perhaps one's a VP level at a making a decent income somewhere else. At this level, the math isn't so much
matters, it's more about just are you in the right tax bracket? This is kind of million house these days is very hard to attain. Even in San Francisco, where 73% or more, less than 42% of households earn $200,000 or more. So, even in one
of the most expensive markets in the country, the affordability gap is huge, just gets even harder. All right, so what's the takeaway here? A 250k house means that you need to be making roughly 85k per year using the 30% net income
rule. A $500,000 house will need about 160k per year. A million-dollar house needs $320,000 per year, and a $2 million house would probably need around $700,000 per year to feel truly comfortable in my opinion. Most
Americans aren't hitting those numbers. That's just the brutal math of what housing costs in 2026. This gap between what people are earning and what homes actually cost is what's causing the housing crisis. But what I want you to
take away from this video is not fear or dread in general. I just want you to run decide what's affordable for you. If you do this, I can guarantee you that you'll be in a lot better of a financial position, and you'll be able to sleep
of a better financial position, though, make sure to check out this video right here on every way to grow your net worth fast in 2026. Did you like that me know. If you enjoyed this video, I hope you'll also enjoy this one. So,
I'll see you in that video, and I'll catch you in the next one. Peace.