1031 : potential primary residence

[Dhiraj Chhabra]

Question on 1031 exchange. I am a buy and hold investor, have never done 1031 before, so any help is appreciated. I bought this house for primary living: $1m on a traditional feddie/fannie loan, plan was to live in the house myself. But I am getting $1.5m for this house. Can I sell it and do 1031 exchange, since the initial loan is with traditional primary residence financing, will there be any impact?

If I do 1031, do I have to buy the new property worth $1.5m or higher

or 

i have to use the profit: $500k in the new investment property.