How to Afford a Million-Dollar Home - Pacaso | Pacaso (2024)

FAQs

How to Afford a Million-Dollar Home - Pacaso | Pacaso? ›

To comfortably afford a home valued at $1 million, financial experts recommend an annual salary between $269,000 and $366,000. This range, however, is subject to variation depending on your: Annual income. Debt-to-income ratio (DTI)

Using all of the same information in the example above, but shifting the downpayment from 20% to 10%, the monthly mortgage payment on a $1 million home would be $7,295. And in this case, your gross annual income would need to be $225,000 to $240,000.

Financing a Pacaso second home

Buyers can pay for their co-ownership share in a few different ways. You can pay with cash, cryptocurrency, a HELOC or personal line of credit, or special financing. Through our banking partners, you can access competitive loan rates and enjoy a fast and easy application process.

Apply for a jumbo loan

These loans exceed the limits set by government-sponsored entities, making them suitable for million-dollar homes. Jumbo loans often require a strong credit score, a low debt-to-income ratio, and, typically, a higher down payment.

Pacaso fees and a markup on the property's market value are actually how the company turns a profit. Your co-owner group will be paying for property management in the long run, as with any other high-end vacation home.

And, here is the answer to the question: You need anywhere from $100,000 to $300,000 in income to buy a $1 million dollar home right now. The reason there is so much variance is because there are so many factors that impact qualification, including: Size of down payment. Property tax rates.

If you earn at least $240,000 to $300,000 a year, you may be able to afford an $800,000 mortgage, assuming you have no significant other debts. But the exact amount you can qualify to borrow — even if you're in that salary range or higher — will depend on several other variables, including your credit score.

Nearly one-in-ten U.S. homes are now worth at least $1 million. Analysis from Redfin has found that 8.2% of homes in America were million-dollar homes as of June 2023, nearing the June 2022 peak of 8.6%.

Most have paid off their mortgages. In 2020, 58% of the state's equity millionaires owned their homes free and clear.

To simplify things, rich people take out mortgages even though they don't need them because it is extremely profitable for them to do so. It really is that simple.

Who competes with Pacaso homes? ›

Today, Pacaso's customers co-own homes across the U.S. and Europe in 40 markets — from a house in California wine country to a villa in Ibiza, Spain. Six months after launch, the business scored a $1 billion valuation, record timing in the startup world for achieving coveted unicorn status.

With Pacaso co-ownership, you enjoy the benefits of second home ownership without the hassles. Unlike timeshares, a Pacaso is a fully managed vacation home with a property-specific LLC controlled by the two to eight co-owners of the home.

For a $1 million home, you're likely to need a minimum of $200,000 to $300,000 saved for that purpose. But a down payment isn't the only thing to save for. Home buyers have to consider closing costs on their home purchase, too. Closing fees typically start around 2% of the buyer's mortgage loan amount.

One rule of thumb is that the cost of your home should not exceed three times your income. On a salary of $70k, that would be $210,000. This is only one way to estimate your budget, however, and it assumes that you don't have a lot of other debts.

250k Salary and Low Credit

If you have only a small monthly debt ($250/mo) your purchase budget is $763,500. A modest monthly debt of $500/mo reduces your purchase budget to $737,200. The above estimates do not include a down payment, so borrowers may be able to offset a low credit score by paying more up front.