How much money you need to earn to afford a $400,000 home

The median home sales price in the United States was $426,900 in June 2024, which was a 4.1% increase from June 2023 according to the National Association of Realtors®. So, it’s safe to say that many would-be-homebuyers may be looking for a house in the $400,000 range.

Learn more: The $200,000 starter home is going extinct. 

If you’re in the market for a $400,000 home, it helps to understand how much income you need to comfortably afford the mortgage payment. The guide below breaks down everything you need to know about qualifying for a $400,000 house—including the salary you need to earn, the down payment you need to save, how mortgage rates can affect your monthly payment, and the risks involved if you take out a larger mortgage than you can really afford.

How much income do I need to afford a $400,000 house?

We’re going to walk through a couple examples further down in this piece that place the yearly salary needed to afford the mortgage payment on a $400,000 house at about $104,904 to $131,652. Just keep in mind each homebuyer’s situation is unique to them. 

“To comfortably afford a $400,000 home, your income needs to be sufficient to cover your mortgage payment and other fixed debt obligations while maintaining financial stability,” says Kelly Miskunas, senior director of capital markets at lender Better.com. 

The income you earn plays a key role in determining how much house you can afford when you’re ready to become a homeowner. But income alone isn’t the only detail mortgage lenders consider when determining loan eligibility. 

How your income relates to the debts you owe, more technically known as your debt-to-income (DTI) ratio, also impacts your ability to qualify for a mortgage. And your credit score, interest rate, and down payment can affect whether you can afford a $400,000 house or a mortgage of a different amount. 

Learn more: What credit score do you need to buy a house?

While certain loan programs (like FHA loans) may be available to borrowers with a DTI ratio as high as 50%, others may be more restrictive. Many lenders prefer a DTI ratio below 36%. Generally, the lower the better, when it comes to your DTI.

Learn more: FHA loans vs. conventional home loans. 

You should also do your research to decide what you’re comfortable paying toward a mortgage each month. It’s essential to have a clear understanding of your household budget and current financial obligations so you don’t overextend yourself when you purchase a home.

The Office of Financial Readiness, under the U.S. Department of Defense, provides several housing calculators that can be helpful in estimating what you can comfortably afford. 

Can a single person afford a $400,000 house?

Lenders cannot discriminate against single mortgage applicants. At the same time, single-income home buyers need to meet the same criteria to qualify for a mortgage as joint borrowers. Depending on the amount of income you earn, it could be more challenging to qualify for a $400,000 home by yourself. 

If you’re looking for ways to improve your qualification odds as a single homebuyer, here are some tips.

• Focus on your credit score: A good credit score might make you eligible for both a more attractive mortgage rate and a larger loan amount. How much does your rate matter? Quite a bit. For example, let’s say you bring a down payment of 20% ($80,000) and need to finance $320,000. If you score a 7% interest rate, that’s about $2,129 per month not accounting for taxes, insurance, etc. But if you score a 6% rate, that monthly payment drops $210 to about $1,919. 
• Save a larger down payment: If you can provide your lender with a higher down payment—especially a down payment of 20% or more—you might increase your odds of qualifying for a $400,000 mortgage on your own.
• Pay down debts: If your DTI ratio is too high, paying down existing debts could help you save money on interest charges, improve your credit score, and possibly improve your loan approval odds. 
• Increase your income: We know this isn’t always easy. But, if you have the opportunity, earning more income could work in your favor when you’re trying to qualify for a higher loan amount. Just make sure that the income comes from a source you can include on your mortgage application. 

What should a couple’s combined income be to buy a $400,000 house?

There’s no set-in-stone amount of income you need to earn to qualify for a $400,000 house. Lenders consider details like your down payment and your DTI ratio, as well as your income, when determining the amount of money you’re eligible to borrow. That’s why it’s important to talk to a lender about your specific situation before you begin the homebuying process. 

But if you’re looking for some basic guidelines, Anna DeSimone, author of “Closing the Gap in Homeownership: Re-Writing the Rules Against Mortgage Discrimination” says this: 

“A home purchase of $400,000, (with) a down payment of 10%—$40,000—would require an annual income of about $120,000. Loan qualification is based on the combined monthly pre-tax income for all borrowers listed on the application.”

The 28/36 rule for mortgage payments and other debt

When you buy a home, the 28/36 rule recommends that you spend a maximum of 28% of your income on housing costs. In general, lenders require that the principal, interest, taxes, and insurance (PITI) costs on your home be equal to 28% or less of your gross monthly income. That’s your income before taxes. 

The 28/36 rule also holds that you should spend no more than 36% of your income on all of your combined debts—housing costs included. 

Below are a couple of hypothetical examples that demonstrate how using the 28/36 rule works. The goal is to provide a rough idea of the amount of income you might need to afford a $400,000 home. 

In Example No. 1 above, the assumption is that you’re providing a 7% down payment on a $400,000 mortgage. (Note, if this were a conventional loan, you would also need to pay the added cost of private mortgage insurance since you’re putting less than 20% down.)

A 7% down payment on a $400,000 home equals $28,000. So, you would need to borrow $372,000. When you estimate property taxes, insurance, and PMI, that brings your monthly mortgage payment on a 30-year fixed home loan to around $3,055 (assuming a 7% fixed interest rate). 

Based on the 28/36 rule, your mortgage payment should be no more than 28% of your pre-tax income. As a result, you need to earn around $10,911 per month, or $131,652 per year, to afford a $400,000 home in this scenario. 

In Example No. 2, a 20% down payment on a $400,000 mortgage would equal $80,000. So, you would need a $320,000 mortgage in this scenario. With a 20% down payment, however, you might be able to avoid paying PMI fees. This would bring the estimated cost of your mortgage payment, including property taxes and insurance, to $2,447.62 per month (assuming a 6.5% fixed interest rate).

Using the 28/36 rule, you would need to earn around $8,742 per month, or $104,904 per year to afford a $400,000 home in this scenario. Yet keep in mind that on a real mortgage application there are many other factors that a lender needs to consider. Your debt-to-income ratio in particular could change the calculations in both of these hypothetical situations significantly. 

On a personal level, you should also examine financial commitments that your lender might not see. Obligations like childcare or debt payments that don’t appear on your credit report—for example, tax bills or repaying a loan from a friend or family member—could have a meaningful impact on your ability to afford a new mortgage payment.

How much should a down payment on a $400,000 house be?

Your down payment can influence how much you can afford to borrow when you purchase a home, and the cost of your monthly mortgage payment as well. A down payment builds immediate equity and may make it easier for you to qualify for a mortgage by reducing the risk involved for the lender. 

Yet it’s important to remember that there are many options available where down payments are concerned. And the idea that there’s a perfect down payment amount for a $400,000 home loan is false. 

“I think people worry about having an ideal down payment, but in reality there’s no such thing,” says Jennifer Beeston, SVP of mortgage lending at Guaranteed Rate Mortgage. “The down payment that’s best for you will depend on the money you have available and the monthly payment you are comfortable making.” 

It is worth pointing out that if you want to avoid private mortgage insurance (PMI), a down payment of 20% or more is typically needed. 

Still, there are first-time homebuyers programs available with 3% down payment options as well. And if you’re eligible for a VA loan or a USDA loan, you may be able to purchase a new home with zero percent down. 

Historical chart of median sales price of houses sold in the U.S.

Despite some slight up and down fluctuations over the last couple of years, overall home prices have soared in the United States since 2020. In the first quarter of 2020, the median sale price for a home sold in the U.S. was $329,000. Meanwhile, the COVID-19 pandemic introduced a storm of market forces that began to drive home prices upward. 

During the pandemic demand for housing increased at a rapid rate as more workers needed to work from home—and many desired to do so outside of heavily populated areas. At the same time, new construction was not as readily available as it would be during normal times thanks to supply chain issues. 

Additionally, when the Federal Reserve cut its target interest rate effectively to 0%, very low mortgage interest rates became available—making homeownership accessible to borrowers who previously might not have been able to take out a home loan. This combination of events pushed home prices up at a rapid pace. 

By Q1 2021, the median U.S. home sale price jumped to $355,000. A year later (Q1 2022), U.S.  homebuyers were paying a median sales price of $413,500. In 2024—some four years after the initial pandemic-related price surge began—housing prices show slight signs of settling, or at least not continuing the same rapid growth pattern as before. But housing inventory still remains below pre-pandemic averages. 

Learn more: House prices almost never go down.

Here’s a look at the history of median home sales price as presented by the Federal Reserve Bank of St. Louis (FRED):

If you’re in a high-cost-of-living area, home prices may be significantly higher than the national median. In that case, see our guides affording a $500,000 home, a $600,000 home, and a $1 million home. 

Where can you find houses for $400,000?

As mentioned, the median home sales price in the United States was $426,900 in June 2024 according to the most recent data available from the National Association of Realtors® at the time of writing. Yet home prices in certain areas of the country may be higher or lower than average. 

Across the majority of the United States, finding a home in the $400,000 range shouldn’t be too difficult. In fact, about 83% of county median home prices were $350,000 or less in Q1 2024, according to an NAR analysis of FHFA and U.S. Census Bureau data. 

However, median home prices have climbed in certain areas of the country including California, Utah, Arizona, Hawaii, Wyoming, Montana, Washington, Oregon, and heavily populated areas in the central U.S. and along the East Coast. In the next-to-most-expensive counties (1.2% of the U.S.), median home prices range between $750,000 to $1,000,000.   

And, in a sliver of about 0.6% of the country, the median home price is $1 million or more. 

What are the potential risks of buying a $400,000 house?

Becoming a homeowner can be a positive investment toward your financial future. But at the same time, there are risks associated with buying a home, especially if you take out a sizable, $400,000 or more mortgage. 

Beeston of Guaranteed Rate Mortgage explains, and emphasizes the importance of knowing your budget:

“The potential risk of buying any house is that you get in over your head and end up ‘house poor,’” she says. “(That’s) when you can only afford your home and utilities and everything else is a struggle. Never assume that because a lender says you can qualify that you actually can afford the payment.”

As a new homeowner, you may also encounter expenses on top of your mortgage that you’re not used to paying, especially if you’ve only been a renter in the past. Some of the hidden costs of home ownership could include maintenance, HOA fees, and property taxes (if your lender doesn’t include them in your mortgage payment).

Can you negotiate the price of a $400,000 house?

When you’re ready to buy a house, an important step in the process is finding the right real estate agent to guide you. An experienced real estate agent in your area can help you navigate the process of selecting a lender (if you haven’t already done so) and getting preapproved for a mortgage. 

Once you’re preapproved for a mortgage and begin shopping for a home, your real estate agent can help you make offers and attempt to negotiate the price of any property you’re serious about purchasing. Keep in mind that if inventory is low in your area or if multiple buyers are interested in the same property, the seller may be less willing to negotiate. 

But the longer a property has been on the market and the fewer offers a seller receives, the more open to negotiations a seller may be. An experienced, reputable real estate agent will understand the nuances of your local market and will know how to best guide you through the homebuying process. 

Current mortgage interest rates

Interest rates are another major piece of the housing affordability puzzle. Mortgage interest rates impact your monthly loan payment and the amount of interest you pay over the life of your loan. Below is a look at where rates are at currently for a few different types of mortgage options, per mortgage data and technology company Optimal Blue.

Chart of mortgage rate trends

During the pandemic, the Federal Reserve lowered its target interest rate to near zero—making it easier for consumers to borrow money and for businesses to stay afloat and keep workers employed. In 2022, inflation began to surge and the Federal Reserve raised the federal funds rate in response. As a result, mortgage interest rates began to climb—making mortgages more expensive and homeownership less accessible for many Americans. 

The chart below provides a closer look at mortgage interest rate trends over recent months, according to data from Optimal Blue.

Note that there’s a lag of one business day for reporting, meaning the most current rate available is the one shown for the prior business day’s date.

The takeaway

There’s no clear-cut rule that can help you determine the exact salary you need to qualify for a $400,000 home. Every loan application is different. That’s why it’s a good idea to find a trustworthy lender and review your individual mortgage options together.

But, depending on the particulars of your situation, yearly income of $104,904 to $131,652 may allow you to afford the monthly mortgage payments on a $400,000 home.

Frequently asked questions

How much should a first house cost?

As a rule of thumb, your total housing expenses shouldn’t exceed 28% of your gross monthly income—whether you’re buying your first home or you’re a seasoned homeowner. It’s also important to examine your personal budget and consider all of your financial obligations when you purchase a home. You don’t want to commit to a mortgage payment that’s too high and wind up feeling stressed out every month when it’s time to pay your bills. 

What credit score do I need to buy a $400,000 house?

In general, it’s helpful to have a credit score of at least 620 or higher when you apply for a mortgage. Yet some lenders may be willing to approve you for certain loan programs with a FICO Score as low as 500. 

How much house can I afford on a $70,000 salary?

Based on the 28/36 rule, a $70,000 salary would afford you a maximum monthly housing cost of around $1,217. But keep in mind that factors like your down payment amount and the interest rate a lender offers you (based in large part on your credit score) will have a big impact on your loan amount. And your debt-to-income (DTI) ratio plays a meaningful role as well. 

It’s likely possible to qualify for a $120,000 mortgage, or even one up to $249,000, with a $70,000 salary—depending on factors such as your down payment and any existing debt you’re carrying. So, your best bet is to speak with an experienced mortgage lender about your loan options, along with possible ways to increase your borrowing power if needed. 

What’s the monthly mortgage payment on a $400,000 house?

Many factors impact your monthly mortgage payment on a $400,000 house. Details such as the down payment you provide, your interest rate, loan term (e.g., 30-year loan, 15-year loan, etc.), and additional costs like property taxes and homeowners insurance can all affect the amount of money you owe to your lender on a monthly basis.

Your lender should provide you with a mortgage amortization breakdown that details what your payments will be throughout the life of your home loan. Make sure you understand and are comfortable with how much your mortgage payments will cost before you finalize your loan.

But, as a rough estimate, you might pay around $2,023 per month (prior to any applicable taxes, fees, and insurance being added on) if you put down $80,000 and borrowed $320,000 at a 6.5% interest rate to buy a $400,000 home. 

How much house can I afford with $10,000 down?

Conventional home loans generally require a minimum of 3% down if you’re a first-time homebuyer, 5% down otherwise. A $10,000 down payment could get you to 3% on a home that’s around $330,000, or to 5% on a home that’s priced at $200,000. On a $400,000 home, 3% would be $12,000 down while 5% would be $20,000 down.

Different loan programs come with different down payment requirements. If you’re saving money for a house, a 20% down payment could help you avoid PMI fees, quickly build equity in your home, and reduce your monthly mortgage payment. But some loan programs are available with as little as 0% down. Remember though that in addition to your down payment, you’ll also be responsible for paying closing costs out of pocket, typically 2% to 6% of the home price.

As a result of these variables, it’s important to talk to a lender about the ideal down payment size for your individual situation. A $10,000 down payment could be more than enough if you’re trying to save 3% down on a $200,000 home, as noted above. But if your hope is to purchase a $400,000 home, you’ll probably need to save more money or see if you qualify for down payment assistance.