Living in and owning a luxury home is something that many people dream of accomplishing. There's something about a nice, large, well-designed home that draws that people enjoy viewing; there are even tour series of million dollar homes that people pay to be a part of. When you get a taste of how these homes are, it's only natural that you start wondering just how much money you would need to afford one. Though the home's value is at one million dollars, with a mortgage you won't have to pay all of that upfront. So how much cash and what kind of income would you need? Down Payment First, you have to think about the down payment. Because the loan for a house costing about a million dollars is going to be large, the lender is going to want a larger down payment. While the exact amount required will vary depending on the market and the lender, it will usually be at least 30 percent. This means you'll need to have about $300,000 in cash in order to start the mortgage process. Monthly Payment If you were able to save the money for the down payment, the next step is making sure you could afford the monthly payments. With a 30 year mortgage at 5 percent interest rate, you'll be looking at payments of about $5,000 each month (it will vary depending on property tax as well). Recommended Income Most people recommend that the amount you pay for rent or mortgage should be around 30 percent of what you make each month. This would mean that in order to afford the monthly payments, you should have an income, after taxes, of about $15,000 a month, or $180,000 a year. It is still a lot of money, but it isn't unrealistic for people with $200,000 salaries to purchase million dollar homes, though saving up for the down payment might take some time. Leverage Global Partners (http://www.leveragere.com/) is a network of exclusive independent real estate firms around the world. For more info about million dollar homes visit our website!
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