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If you earn a minimum of $180,000 a year, you may be able to afford a $600,000 mortgage — as long as you don’t have any other significant debts. But the exact amount you may qualify to borrow — even if you’re in that income range or higher — may also depend on several other variables, including your credit score and down payment.

Read on for a look at how much income may be needed for a $600,000 mortgage, how income fits into the overall mortgage equation, and how lenders typically determine the mortgage amount a homebuyer can handle.

What Income Is Needed to Get a $600,000 Mortgage?

You might think the loan amount you’ll receive when you apply for a mortgage will be based mostly on your household income. But income is just one of several factors lenders generally consider when deciding how much someone can borrow.

The home mortgage loan a borrower can qualify for usually is based on how much the lender believes that person can reliably pay back. So the loan company will run your financials through a few different checks and calculations to come up with that number. Here are a few things lenders may look at when you apply:

Reliability of Income

Be prepared to be asked not only about your income but also how long you’ve had your job (or your business if you’re self-employed). When it comes to your income, if you want to get an idea of where you stand before you apply for a mortgage, an online home affordability calculator can help you estimate whether your income is high enough to afford a $600,000 loan. Or you might try prequalifying with one or more lenders.

Creditworthiness

Lenders will also check your credit score and credit reports to ensure that you’re financially responsible and pay your bills on time.

Down Payment Amount

Contrary to what many people believe, a 20% down payment isn’t required to get a home loan. First-time homebuyers may be able to put as little as 3% down with some lenders, or even less, depending on the type of mortgage they get. A larger down payment can help you lower your monthly payments, however, and it can show lenders you’re serious about your investment.

Debt-to-Income (DTI) Ratio

You can also expect lenders to compare your monthly gross income to your existing monthly debts (such as credit cards and student loans) to help assess if you’ll be able to manage all your payments. This calculation is called your debt-to-income ratio. (DTI = monthly debts ÷ gross monthly income.)

What Is a Good Debt-to-Income Ratio?

The Consumer Financial Protection Bureau (CFPB) advises homeowners to work toward maintaining a DTI ratio of 36% or less. And in general, that’s the number mortgage lenders are looking for, as well. But some lenders may accept a DTI ratio of up to 43% — or even higher if the borrower can meet other criteria on certain types of loans.

What Other Factors Are Mortgage Lenders Looking For?

Here are a few formulas your lender — and you — may use to determine how much house you can afford on your income.

The 28/36 Rule

The 28/36 rule combines two factors that lenders typically look at to determine home affordability: income and debt. The first number sets a limit of 28% of gross income as a homebuyer’s maximum total mortgage payment, including principal, interest, taxes, and insurance. The second number limits the mortgage payment plus any other debts to no more than 36% of gross income.

For example: If your gross annual income is $180,000, that’s $15,000 per month. So with the 28/36 rule, you could aim for a monthly mortgage payment of about $4,200 — as long as your total monthly debt (your mortgage payment plus car payment, credit cards, etc.) isn’t more than $7,200. With disciplined budgeting, you may be able to afford a $600,000 mortgage at this income level.

The 35/45 Model

Another calculation lenders might look at is the 35/45 method, which recommends spending no more than 35% of your gross income on your mortgage and debt, and no more than 45% of your after-tax income on your mortgage and debt.

For example: Let’s say your gross monthly income is $20,000 and your after-tax income is about $15,000. In this scenario, you might spend between $6,750 and $7,000 per month on your debt payments and mortgage combined. This calculation allows you to spend a bit more on your mortgage payment… as long as you aren’t carrying a heavy debt load.

The 25% After-Tax Rule

If you’re nervous about keeping up with your monthly mortgage payments, this formula will give you a more conservative amount to shoot for. With this calculation, your target is to spend no more than 25% of your after-tax income on your mortgage.

Keep in mind that these calculations can give you only a rough estimate of how much you can borrow. If you want to be more certain about the overall price tag and monthly payments you can afford, it may be helpful to go through the mortgage preapproval process.

What Determines How Much House You Can Afford?

Here’s something else to consider when determining how much income is needed for a $600,000 mortgage: A house payment isn’t limited to just principal and interest. And the extra expenses that may be tacked on every month can add up fast. Let’s examine the costs covered by a monthly loan payment:

Principal

Principal is the original amount borrowed to buy the home. Each month, a portion of your payment will go toward paying down this amount.

Interest

Interest is the money you pay to the lender each month for giving you the loan. The interest rate you pay can be influenced by personal factors (such as the loan length you choose, your credit score, and your income) as well as prevailing rates in the market.

Homeowners Insurance

The cost of homeowners insurance (coverage that protects your home and other assets from various risks), also may be rolled into your monthly mortgage payment. Your lender will then pay this premium when it’s due.

Mortgage Insurance

Depending on the type of loan you get and the amount you put down on your home, you may be required to carry private mortgage insurance (PMI) or some other type of mortgage insurance policy. This insurance is designed to protect the mortgage lender if a borrower can’t make the agreed-upon loan payments.

Property Taxes

A portion of your monthly mortgage payment may also go toward the property taxes you’ll pay to your town or city.

Recommended: Home Loan Help Center

$600,000 Mortgage Breakdown Examples

The monthly payment on a $600,000 mortgage can vary based on several factors, including the length of the loan (usually 15, 20, or 30 years) and the interest rate. A mortgage calculator can give you a pretty good idea of what your payments might be. Here are some examples of how the payments for a $600,000 mortgage might break down.

30-Year Loan at 6.00% Fixed Interest Rate

Total Payment: $4,562

Principal and Interest: $3,597

Other Costs (estimated PMI, homeowners insurance, and property taxes): $965

15-Year Loan at 6.00% Fixed Interest Rate

Total Payment: $6,028

Principal and Interest: $5,063

Other Costs (estimated PMI, homeowners insurance, and property taxes): $965

30-Year Loan at 7.00% Fixed Interest Rate

Total Payment: $4,957

Principal and Interest: $3,992

Other Costs (estimated PMI, homeowners insurance, and property taxes): $965

15-Year Loan at 7.00% Fixed Interest Rate

Total Payment: $6,358

Principal and Interest: $5,393

Other Costs (estimated PMI, homeowners insurance, and property taxes): $965

Pros and Cons of a $600,000 Mortgage

According to Redfin, the median home sale price in the U.S. in March 2024 was $432,812. So if you can qualify for a mortgage that’s around $600,000, there’s a good chance you’ll be able to find a pretty nice home — depending on where you live.

The downside of borrowing $600,000 is that your mortgage payments could take a sizable slice out of your income every month. If you’re cutting it close and you experience an unexpected expense or temporary job loss, you may have trouble staying on track. Before moving forward with a loan of this size, you may want to speak with a financial advisor and be sure the amount fits with your budget and your other goals.

Recommended: Best Affordable Places to Live in the U.S.

How Much Will You Need for a Down Payment?

A down payment is generally between 3% and 20% of the purchase price. The amount you’ll need for a down payment will depend on the cost of the home you plan to buy and the type of mortgage loan you get.

Can You Buy a $600,000 Home with No Money Down?

You may be able to get a mortgage without making a down payment if you can qualify for a government-backed loan from the U.S. Department of Agriculture (USDA) or a VA home loan from the U.S. Department of Veterans Affairs. These loans are insured by the federal government — which means the government will help pay back the lender if the borrower defaults on the loan.

Not all lenders offer these programs, and borrowers must meet specific requirements to qualify. But if you think you may be eligible, it could be an option that’s worth looking into.

Can You Buy a $600,000 Home with a Small Down Payment?

Some private lenders will accept as little as 3% down from a first-time homebuyer on a conventional mortgage, so don’t give up if you can’t get a no-down-payment loan.

You also may want to check out the requirements for a government-backed FHA loan, which allows buyers to make a down payment as low as 3.5%. There may be a limit on how much you can borrow with an FHA loan, depending on where you buy, but the 2025 limit in higher-cost areas can be as much as $1,209,750. And in Alaska, Hawaii, Guam and the U.S. Virgin Islands, the 2024 limit is $1,724,725.

Is a $600,000 Mortgage with No Down Payment a Good Idea?

There’s no question that coming up with a down payment can be an obstacle to homeownership — especially for first-time homebuyers. And the thought of skipping that step may be appealing if it could help you get into a home faster, or allow you to hold onto your savings for renovations, an emergency fund, or other financial goals.

It’s important to remember, though, that without a down payment it can take longer to build equity in your home. And though you won’t have to pay for mortgage insurance with a no-down-payment government-backed loan, you can expect to pay an upfront funding fee for a VA loan and an upfront and annual guarantee fee for a USDA mortgage. A mortgage professional can help you weigh the pros and cons of different types of mortgage loans and determine the best move for your individual circumstances.

What If You Can’t Afford a $600,000 Mortgage Even with No Down Payment?

Here are a few steps to consider if it turns out you can’t afford the payments on a $600,000 mortgage:

Pay Off Debt

If your DTI ratio needs work, you may want to suspend your home search and concentrate on paying down recurring debts like credit cards, car payments, or a personal loan. This could allow you to put more of your monthly income toward your mortgage payments.

Build Your Credit

Checking your credit reports can give you an idea of what lenders might see when they evaluate your creditworthiness. If there are any errors, you can take steps to fix them, and if you see something negative in your reports, you can work on doing better. If you use a credit-score monitoring service, you may already know what your credit score is and if it needs a boost. Conventional lenders typically look for a minimum score of 620 to 640.

Start Budgeting

Creating a budget and trimming some expenses could help you reach your debt-payment and savings goals. Remember: If you can come up with a bigger down payment, you may be able to borrow less, keep your monthly payments to a more reasonable amount, and pay less in interest over the life of the loan.

Alternatives to Conventional Mortgage Loans

If you can’t qualify for a conventional mortgage loan, you may have some alternatives to consider. Here are a few potential options:

First-time Homebuyer Programs

As mentioned above, you may qualify for a federal, state, or local first-time homebuyer program that can help lower your down payment, closing costs, and other expenses. There may be limits on the type of home you can buy or a cap on the home’s cost. But you might find it’s worth doing some research, or asking a mortgage professional, to see if you’re eligible.

Rent-to-Own

Another option may be to enter into an agreement to rent-to-own a home. With this type of arrangement, you start out renting, but the landlord agrees to credit a portion of your monthly payment toward purchasing the home. This can be a good way to start working toward homeownership if you can’t qualify for the mortgage amount that you want. But it’s important to understand the downsides of the deal — including that you might lose money if you change your mind about buying the home, or if the landlord has second thoughts about selling.

Owner Financing

With owner financing, the person who’s selling the home may serve as the lender for all or part of the purchase price. Just as with a rent-to-own home, there are risks to this kind of agreement, but it can make homeownership possible if a traditional loan isn’t available.

Mortgage Tips

No matter how much you plan to borrow, buying a home is a big step. Here are a few things you may want to do to prepare:

Work Out Your Housing Budget

Remember, your housing costs won’t be limited to principal and interest. It’s important to determine how much you might pay for insurance, taxes, homeowners association dues, maintenance, and other expenses before you make the leap to homeownership.

Find the Mortgage that Best Suits Your Needs

This may include deciding whether you want a:

•   fixed vs. variable interest rate

•   conventional vs. government-backed loan

•   shorter vs. longer term loan

Get Preapproved

Going through the mortgage preapproval process with a lender can give you a better idea of how much you can afford to spend on a home. And having preapproval may give you an edge over other house hunters in a tight market.

The Takeaway

Obtaining a mortgage is just one of many steps in the homebuying process, but it’s an important one. Taking the time to do some research could keep you from getting in over your head — or locked into a loan that isn’t a good fit.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much income do you need to qualify for a $600,000 mortgage?

If you make at least $180,000 a year, you may be able to qualify for a $600,000 mortgage, depending on how much debt you’re carrying and other variables.

How much is a $600,000 mortgage per month?

The monthly payment for a $600,000 mortgage can vary based on several factors, including the length of the loan and the interest rate. For example, a 30-year fixed-rate mortgage with a 7.00% interest rate could be $3,992 per month for principal and interest alone, while the principal and interest for a 15-year fixed-rate mortgage with a 7.00% interest rate could be $5,393 per month.

Can I afford a $600,000 house on a $100,000 salary?

It would be very difficult to keep up with the monthly payments or even qualify for a loan to buy a $600,000 house on a $100,000 salary — that is, unless you have additional income outside of your salary or make a very large down payment on the property.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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Most estimates suggest that you would need to make around $130,000 a year to qualify for a $400,000 mortgage. Considering that the latest average annual income is around $64,000, and the average home price was $513,100 in the first quarter of 2024, today’s homebuyers need an above-average income to purchase an average-priced home.

Let’s look at what factors lenders consider when qualifying you for a mortgage, what to do if you can’t afford a down payment, and what alternative financing sources are available.

How Much Do You Need to Make to Get a $400,000 Mortgage?

Assuming a 30-year fixed-rate mortgage loan, a down payment of 7% (on a home priced at $430,000), and an interest rate of 7.00%, you would need to earn $130,000 per year to qualify for a $400,000 mortgage. Your estimated monthly mortgage payment of $3,494 would include property taxes and insurance, among other costs. This assumes that you don’t have any other significant debts — so let’s look more closely at how debt affects your mortgage situation.

What Is a Good Debt-to-Income Ratio?

If you have significant debt payments each month, you will need to earn more to qualify for a mortgage because your ability to make payments may be compromised. Lenders look at your debt-to-income (DTI) ratio, which is the percentage of your monthly gross income that goes to paying your monthly debt payments, to determine your borrowing risk and your loan terms.

Lenders typically prefer that your DTI be no higher than 36% with no more than 28% to 35% of that debt going toward a mortgage payment. The lower your DTI, the less of a risk you are to a lender and the better your terms will be.

What Determines How Much House You Can Afford?

How much you earn is one factor that determines how much house you can afford. Two other factors that could be considered under your control are how much debt you are carrying and how much of a down payment you can afford. In addition, there are factors you cannot control, such as interest rates on the different types of mortgage loans, as well as house prices.

If you have significant debt payments each month, the required income for a $400,000 mortgage will go up. The interest rate offered by a lender will also affect your monthly mortgage payments. If the interest rate is 7.5%, you might need to earn more than if the interest rate is 7%.

The more you can afford as a down payment, the lower your monthly payment will be, particularly if you can put down 20% or more of the home’s price. This is because a down payment of less than 20% will result in the lender requiring you to have private mortgage insurance, or PMI. (Conventional loans are not insured by a government agency so PMI protects lenders if owners default.) A mortgage calculator with taxes and insurance will help you determine the monthly cost of owning a house, factoring in the extra costs.

Going through the mortgage preapproval process can help you get even closer to your specific numbers.

What Mortgage Lenders Look For

Lenders like borrowers who do not pose too much of a risk regarding paying back the loan. If you have a good credit score, minimal debt, and a steady income, you are exactly what they are looking for.

Your Credit Score

Making timely payments on any credit cards or loans that you have and not applying for new credit or debit cards around the time that you apply for a mortgage will help cultivate a credit score that lenders find attractive.

Your Debt

Lenders also look at your credit utilization ratio. This is an indicator of how much of your available credit you are currently using. The less you are using the better, and a ratio of under 30% is preferable. For example, if your credit card has a $15,000 limit, keep your balance at $4,500 or below.

Your credit report will indicate to a lender whether you have ever declared bankruptcy, or if you are an authorized user on someone else’s credit card.

Other Assets

A mortgage lender may also look at other assets, such as checking, savings, retirement accounts, stocks, and property. If you have such assets, the lender might consider you less of a risk because you have a way to pay the loan if you experience a financial emergency.

$400,000 Mortgage Breakdown Examples

Everyone’s financial situation is unique. Looking at examples of different down payments, debt levels, and interest rates from Fannie Mae’s mortgage calculator can help give you a sense of where you might fit in.

$400,000 30-year mortgage with 7% down payment and PMI and 7.00% interest

•   Principal and interest: $2,661

•   Taxes and insurance: $717

•   Private mortgage insurance: $207

•   Total monthly payment: $3,585

$400,000, 15-year mortgage with 7% down payment, and PMI, at 7.00% interest

•   Principal and interest: $3,594

•   Taxes and insurance: $717

•   Mortgage insurance: $207

•   Total monthly payment: $4,518

$400,000, 30-year mortgage with 20% down (no PMI), at 6.50% interest

•   Principal and interest: $2,427

•   Taxes and insurance: $800

•   Total monthly payment: $3,227

How Much Will You Need for a Down Payment?

Many lenders will give you the best interest rates if you can put 20% or more down on your home. However, some conventional loans have much lower down payment requirements.

The less you pay as a down payment, the higher your loan-to-value (LTV) ratio, and the greater the risk you pose to a lender. For example, if your LTV is 90%, you have put down 10%. The lender is taking on a larger proportion of the debt than if you put down 20%, and they may require you to pay private mortgage insurance (PMI) to offset the higher risk.

SoFi’s mortgage calculator shows how much you can save on your mortgage with different down payments.

Can You Buy a $400,000 Home With No Money Down?

Some mortgages require no money down for some people. For example, a VA loan through the U.S. Department of Veterans Affairs requires nothing down, as does a loan from the U.S. Department of Agriculture (USDA).

Can You Buy a $400K Home With a Small Down Payment?

Depending on your situation, you may be eligible for a government-backed loan that allows you to put down very little. Loans through the Federal Housing Administration (FHA) require as little as 3.5% down.

Is a $400,000 Mortgage With No Down Payment a Good Idea?

You will need a government-backed loan, meaning that it is insured by the federal government in case you stop paying back the loan, to get a mortgage with a zero down payment. Two examples of government-insured mortgages are those from the VA and USDA, mentioned above. Each of these types of loans have strict qualifying criteria, such as being an active-duty service member, veteran, reservist, or a surviving spouse for a VA loan, or buying a home in a rural area for a USDA loan.

If you qualify for these loans, it is a good idea to take advantage of them because they offer lower interest rates and better overall loan terms.

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Can’t Afford a $400,000 Mortgage With No Down Payment?

The monthly payments on a $400,000 mortgage with no down payment can be high even with a government-assisted loan. Here are some suggestions to help you cover them.

Pay Off Debt

If you have high-interest debt, your DTI ratio will be high, and you will not get the best interest rate from a lender. A personal loan can be used to consolidate credit card debt and lower the interest you pay overall. A personal loan can help you pay off some of your debt quicker so that you can improve your credit rating and qualify for a mortgage with better terms.

Look Into First-Time Homebuyer Programs

If you are a first-time homebuyer, government or charity-sponsored programs and grants can lower the costs. Some programs may help with a down payment and closing costs. You may qualify as a first-time buyer if you haven’t had any form of homeownership in the last three years.

There are also various tax deductions that can help lower your taxable household income making it easier to afford your mortgage payments. Check with your state or local government to find out what government programs are available to you or go to the U.S. Department of Housing and Urban Development website.

Take Advantage of Tax Deductions

You can save money on your taxes through various tax deductions. Federal and state deductions can lower your taxable household income. For example, for tax year 2024, the mortgage interest deduction could allow you to deduct the cost of mortgage interest paid on debt of up to $750,000 on a primary residence and one second home. Married taxpayers filing separately could deduct interest on up to $375,000 of indebtedness each. You may also qualify for mortgage credit certificates (MCCs). Your tax preparer can help you determine what you qualify for.

Care for Your Credit Score

Your credit score will have a huge impact on the terms that a lender gives you for a mortgage loan. Borrowers can cultivate a healthy credit score by using a credit card wisely. Pay off the balance each month and pay monthly bills, like utilities and rent, on time. Also, as noted above, watch your credit utilization ratio and only use up to 30% of your available credit.

Start Budgeting

If you don’t budget, you will not know how much you can afford to spend each month on housing or other expenses. When creating a budget, think about what your goals are for the next three months, the next year, and five years into the future. The cost of living in your state will be a factor in your planning, so think about whether you will be living in the same place for the long haul.

Track your take-home pay and your expenses. Then, look at areas where you can make positive changes. For example, if you eat out less each week, can you put an extra $100 into a savings account? Using a money tracker can help you keep to a budget.

Recommended: Home Loan Help Center

Alternatives to Conventional Mortgage Loans

The traditional route to buying a home is to take out a conventional mortgage with a bank. You will pay a set amount each month for the life of the loan, typically 15 to 30 years. There are alternative ways to finance a home, each with its own advantages and disadvantages. Here are a few of them.

Borrow from a Retirement Account

If you have significant funds in your 401(k) account or an IRA, you could withdraw them and use them to buy a home. However, if you’re under 59½ years old, you will have to pay a 10% penalty on the withdrawal and taxes on it. If you lose your job, the money has to be repaid within 60 days. Lastly, a withdrawal from a 401(k) (not a Roth IRA) is considered income and may put you in a higher tax bracket.

Borrow from Family

Some companies facilitate home loans between family members. If you choose this option, consult a lawyer and an accountant to make sure legal documents are in order and you will not be subject to the gift tax.

Borrow From an Insurance Policy

Depending on the insurance policy, you might be able to take out a loan against the principal. The cash value can be used to secure the loan, and the premiums used as the repayments. Check with a financial advisor to see how this would affect your future finances and your heirs, and to decide if this is a good option.

Find a Cosigner

Finding a cosigner might help you to qualify for a mortgage or get better loan terms.

Seller Financing

You might be able to secure a seller financing arrangement where the seller takes on the role of the bank and you make mortgage payments to them. The terms of the loan are agreed in advance. This is an option if the buyer cannot secure a conventional mortgage perhaps due to poor credit.

Rent-to-Own

A rent-to-own agreement might work if a buyer has sufficient funds for a down payment. If so, the seller might agree to accept some of the monthly rent as credit for a sale. Another way this could work is if the seller ups the final sales price and all of the rental payments go toward the down payment until the final sale. There are potential downsides to this approach; seek a lawyer’s advice if you are entering into a rent-to-own agreement.

Mortgage Tips

Before you settle on a lender, research all the options available to you. For example, are you a first-time homeowner? Can you qualify for an FHA loan with a lower interest rate and down payment?

Here are some additional tips on how to qualify for a mortgage.

1. Understand the Terms

Your mortgage contract will contain lots of fees and charges in addition to the terms. Have a lawyer assist you in understanding all the details including the payment schedule, penalties for missed or late payments, and penalties for paying off the loan early. Understand whether you have an interest rate that may go up over time and how high it can go.

2. Make Timely Payments

Your credit rating depends on your making timely payments. If you don’t, not only will your credit score suffer, but you will risk foreclosure on your loan if you fall behind on the payments.

3. Avoid Additional Debt

Before you take on the responsibility of a mortgage, it’s wise to pay down your debt so that you can get the best interest rate. It’s also wise to not take on additional debt after you take on a mortgage. If you do, you might find yourself with mounting interest payments and facing bankruptcy if you cannot afford to pay your monthly bills.

4. Shop Around for Home Insurance

You will have to take out a home insurance policy. However, shop around before you choose a provider to get the best quote.

5. Know What You Can Afford

It’s better to take on a mortgage for less than you are approved. For example, if you are approved for a $400,000 loan, you could accept a loan for $300,000. That will buy you some wiggle room and make the payments less stressful.

6. Watch Your Credit Score

As you build equity in your home, at some point you might decide to refinance, particularly if interest rates drop. Refinancing allows you to restructure your debt and pull out equity as cash. If interest rates are lower, your monthly payments might be less. When you maintain a good credit score and manage your debt well, you stand a better chance of qualifying for a relatively low interest rate with a reputable lender.

The Takeaway

It’s quite likely that you will need to earn around $130,000 a year to qualify for a $400,000 mortgage. However, if you can make a large down payment and you have little debt, you are in a much better position. A lender will look at your LTI ratio when considering you for a loan as well as your credit rating. Therefore, paying off high-interest debt, making regular payments to credit cards, and paying off the balance will make you an attractive borrower to a lender.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What income is needed for a $400,000 mortgage?

The income needed for a $400,000 mortgage will depend on your existing debt, your credit rating, and other assets, but in general, you’d probably need an income of around $130,000 a year to qualify. Each lender will look at different factors when assessing you as a risk.

Can I afford a $400K house with a $70,000 salary?

It would only be possible to afford a $400,000 home with a salary of $70,000 if you can put down a very large down payment. Alternatively, if you qualify for a government-backed FHA loan, you may be able to afford a $400,000 home with a 10% down payment, although you would want to have a close look at your household budget and other expenses before taking this step.

What is the average monthly payment on a $400,000 house?

The national average mortgage rate for a 30-year fixed-rate mortgage is 6.95% as of June 2024. If you bought a $400,000 house with 5% down, your monthly mortgage payment would be $3,295. That would include almost $800 per month in property taxes, insurance, and private mortgage insurance (PMI).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

SOHL-Q224-1906606-V1

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After you purchase a new home, there are many things to budget for, including moving costs, new furniture, and ongoing expenses such as your mortgage. Although it may seem like many of the significant expenditures are out of the way once you close on a property, there are additional costs that can add up.

To avoid financial surprises, it’s wise to jot down and budget for all of the extra expenses you will encounter when you move into your new place. To help you organize your finances, here are the things to budget for after buying a house.

Moving-Out Expenses to Budget for

Before you take up residence in your new home, you must move all of your things. Even if you pack and move all your belongings yourself, you’ll still have to spend on things like boxes, packing materials, and a truck. And if you use movers, it will cost you even more.

Recommended: The Ultimate Moving Checklist

Moving Your Belongings

There are three main options for moving your belongings:

•   Renting a truck and doing it yourself. It’s more cost efficient than using professional movers, but DIY moving yourself still adds up. You’ll have to pay for the truck rental fee, gas, and damage protection. If you’re moving across the country, you may also have to factor in the costs of shipping some of your items. Even though you can enlist your friends and family to help you do the heavy lifting, the cost of moving yourself can still be significant, and it’s a lot of work.

•   Hiring movers. If you decide to use professional movers, it’s wise to shop around to find the best price. Here’s why: For moves under 100 miles away, the national average cost of moving is $1,400, and it ranges from $800 to $2,500. If you’re moving long distance, the average cost can be as high as $2,200 to $5,700. To cut costs, you can do your own packing, which may save you money.

•   Moving your things in a storage container. Another option is to use a hauling container — you load your things in it, and the container company moves it to your new location. This usually costs between $500 and $5,000, depending on the distance and how much stuff you’re moving. Long-distance moves will usually cost more than local ones.

Moving Supplies

If you decide to go the DIY moving route, you will need to buy boxes, bubble wrap, labels, and tape. And you likely have more items to wrap and box up than you think, which requires even more supplies.

Cleaning Supplies

You’ll probably want to clean your current property before you move out, and you’ll definitely want to clean the new place when you move in. That means buying mops, sponges, cleaning solutions, and paper towels. You may also want to get the carpets cleaned or hire a professional house cleaner if the place needs a deep cleaning.

10 Common Expenses After Buying a Home

Once the move is done, there are other expenses you’ll need to account for as you settle into your new abode. Here are a few things to budget for after buying a home.

Furniture and Appliances

You’ll likely bring some furniture and decor from your old place, but you’ll probably want to purchase some new things as well. For example, if the appliances are outdated, you might want to upgrade to new ones. And you may have more rooms to furnish, which requires additional furniture.

Consider opening a savings account for the new items you want to purchase. It can also help pay for any unexpected costs, such as having to replace a hot water heater that breaks.

Mortgage Payments

As a homeowner, every month you will making a mortgage payment that typically includes:

•   The principal portion of the payment. This is the percentage of your mortgage that reduces your payment over the life of the loan. The more you pay toward principal, the less you will have to pay in interest.

•   The interest. This is the amount you pay to borrow funds from the bank or lender to purchase your home.

If you are using an escrow account to pay your mortgage, other things may be included in your payment, such as your property taxes, insurance, and private mortgage insurance. This guide to reading your mortgage statement can help you understand all the costs involved in your mortgage payment.

Property Taxes

Property taxes are the taxes you pay on your home. In many cases, these taxes are the second most significant expense after your mortgage. Property taxes are based on the value of your home, which is typically governed by your state. The county you live in collects and calculates the sum due. Usually, property tax calculations are done every year, so the amount you owe may fluctuate annually.

Homeowners Insurance

Homeowners insurance helps protect your home from damage or destruction caused by events like a fire, wind storm, or vandalism. It can also protect you from lawsuits or property damages you are liable for. If someone slips and falls on your sidewalk, for instance, homeowners insurance will pay for the injured person’s medical bills and the legal costs if they decide to sue you.

The cost you pay for this coverage will vary by the type and amount of coverage you select.

Private Mortgage Insurance (PMI)

For borrowers who can’t afford a down payment that’s 20% of the mortgage value, lenders usually require private mortgage insurance (PMI). This type of coverage is designed to protect the lender if you default on your mortgage payments.

PMI can cost as much as a few hundred dollars per month, depending on the sum you borrow.

HOA Dues

This is a Homeowner’s Association fee, which goes toward the upkeep of property in a planned community, co-op, or condo. The amount can range from a couple of hundred dollars a year to more than $2,000, depending on the amenities you’re paying for (like a pool and landscaping). You typically pay HOA fees monthly, quarterly, or annually.

Utilities

Your utility payments include water, gas, electric, trash, and sewer fees. Some bills like water and electricity are based on the amount you use every month, so monitoring your electric and water usage, like taking short showers and turning lights off, can help lower your cost. Other payments, such as your trash or recycling, might be a fixed amount.

Lawn Care

Maintaining the curb appeal of your home requires landscape services and lawn care. If you choose to mow your own lawn, you may need to factor in the purchase of a mower, which can cost about $1,068 on average. If you hire a lawn service to cut your grass, you may pay $25 to $50 a week.

Pest Control

Pests, such as ants, ticks, rodents, or mice, can wreak havoc on your home and your family’s health. For these reasons, many homeowners hire a pest control company to prevent the infestation of pests around their homes. The company’s initial visit may cost between $150 to $300, then $45 to $75 for every follow-up.

Home Improvement Costs

As a homeowner, there are likely things you want to change about your house. From painting the walls to a complete kitchen renovation, transforming your property can add to the cost of owning a home. According to the HomeAdvisor 2023 State of Home Spending Report, homeowners spend an average of $9,542 on home improvement each year.

Additionally, as the features of your home age, you will need to replace and repair them accordingly.

Common Mistakes After Buying a Home

One of the most common mistakes people make when buying a home is spending more than they can afford. For instance, you may forget to factor in utilities, lawn care, HOA fees, costs of upkeep, and other hidden expenses that come with owning a home. It’s crucial to do your research to determine extra costs and add them up before you move forward with purchasing a property.

Another mistake new homeowners make is taking on too many DIY projects. TV shows can make home renovations look easy. However, many of these projects require professionals who know what they are doing. Attempting a home improvement project could cost you more to fix than hiring a pro in the first place. In fact, about 80% of homeowners that attempt their own renovation projects make mistakes — some of them serious.

Unless you can afford an expert, you may want to rethink purchasing a home that requires a lot of renovation.

The 50/30/20 Rule

For help planning your budget as a homeowner, you can use the 50/30/20 rule, which breaks your budget into three categories:

•   50% goes to to needs

•   30% goes to wants

•   20% goes to to savings

That means you’ll be budgeting 50% of your income to go toward necessities such as housing costs, grocery bills, and car payments. Then 30% will go toward things you want, such as entertainment (movies, concerts), vacations, new clothes, and dining out. The remaining 20% goes towards saving for the future or financial goals such as home improvement projects.

Using a 50/30/20 budget rule is simple and easy. It allows you to see where your money is going and helps you save.

Recommended: How to Track Home Improvement Costs

Lifestyle Tradeoffs in Order to Budget

With so many things to budget for after buying a home, you may need to cut back on spending. Start by looking at your discretionary spending and think about where you can trim back. For example, instead of eating out regularly, you can cook more meals at home. Or perhaps you can put your gym membership on hold and do at-home workouts for a while to stay in shape physically and financially.

Recommended: How to Budget in 5 Steps

The Takeaway

After you buy a house, there are many expenses you may not have accounted for, such as the cost of hiring movers; buying furniture; and getting your new place painted, cleaned, and ready to move into. Making a budget is vital to keep you on track financially, so you can enjoy your new home.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How much money should you have leftover after buying a house?

After buying a home, the amount you have left will vary depending on your financial situation. However, it’s a good idea to have at least three to six months of living expenses in reserve. That way, in case of an emergency, you can stay afloat financially.

Is it worth putting more than 20% down?

Putting more than 20% down on your home can help lower your monthly mortgage payment and interest because you’ll be borrowing less money. It also gives you more equity in your home from the beginning. But make sure you can afford to pay more than 20% in order not to stretch beyond your budget.

What’s the 50-30-20 budget rule?

The 50/30/20 rule means that you budget 50% of your expenses for needs (housing, groceries, loan payments), 30% for wants (entertainment, eating out, shopping), and 20% toward savings goals (retirement, renovations, new furniture).

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q224-1921152-V1

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Purchasing a home is one thing, but purchasing a luxury home is a project at a different level. And if you’re planning to take out a $700,000 mortgage — one that’s just shy of the 2025 conforming loan limit of $806,500 — you’re going to need some pretty serious income to repay that debt. We’re talking about an annual income of around $180,000 – $200,000.

When it comes to qualifying for a mortgage, it’s more than just income that matters — and there’s no one-size-fits-all answer to the question, “What income do I need for a $700K mortgage?” That said, there are some important rules of thumb around how much of your income should be spent on a mortgage that can help you determine what’s appropriate for your income — and other factors that mortgage lenders look at during the qualification process.

Income Needed for a $700,000 Mortgage

Again, there’s no set income level required for a $700,000 mortgage — but a mortgage that large is likely to have a hefty monthly payment, which means you’ll need some decent cash flow to be able to make it work.

One rule of thumb states that your housing costs should be no more than 30% of your gross monthly income — that is, your income before taxes or any other deductions. We can use this rule to estimate how much income you need to make a $700,000 mortgage payment feasible.

How Much Do You Need to Make to Get a $700K Mortgage?

Let’s start by using a mortgage calculator to get a rough estimate of how much money per month a $700,000 mortgage will cost.

To create an example, we’ll assume the property value is $750,000, and that you start out with a $50,000 down payment. While your interest rate will vary depending on factors like market conditions and your credit score, we’ll put it at 7.00%, which is fairly typical as of the second quarter of 2024.

Plugging those numbers into the calculator, you’ll see that the estimated monthly payment comes out to about $4,657 per month. To make our 30% rule above even simpler, we can multiply that total by three to get a low-end ballpark income that’s appropriate for a payment that large. That figure comes to around $170,000 per year. Keep in mind, though, that this figure doesn’t include taxes and insurance, which can add an appreciable amount to that monthly bill. And if you’re putting down a smaller down payment, you’ll also have to pay private mortgage insurance (PMI). Add all that to the mix and you’re looking at an annual income requirement that is closer to $180,000 – $200,000.

For many Americans, that income requirement probably sounds pretty hefty: Per the most recent Census data from 2022, the median household income in the United States is $74,580. (Of course, exact income and cost-of-living figures vary by state.) Still, such a large loan may be within reach for some households — though it’s not just income that matters.

Recommended: The Best Affordable Places to Live by State

What Determines How Much House You Can Afford?

Income is obviously an important part of what qualifies you for a mortgage. After all, lenders are interested in your being able to repay the loan over time. However, your ability to earn enough money to support the payment is only one factor that goes into their overall assessment. While each lender has its own specific requirements and criteria, they all look at similar factors.

What Mortgage Lenders Look For

Some of the factors lenders consider when qualifying a borrower for a mortgage include:

•   Income

•   Job stability

•   Credit history and credit score

•   Existing debt

•   Existing assets, such as bank and investment accounts

•   Money available for down payment

To verify all this information, your mortgage loan officer will likely ask for documentation including your tax returns, W-2s, pay stubs, bank statements, and potentially more. Speak with your loan officer directly to learn exactly what you’ll need to submit as part of the mortgage preapproval process.

What Is a Good Debt-to-Income Ratio?

Let’s take a closer look at one very important part of your mortgage application: your debt-to-income (DTI) ratio. This important measurement is expressed as a percentage, and shows lenders how the debt you already carry compares to your available monthly income. It’s calculated by dividing your monthly debts over your gross monthly income.

While, again, specific requirements vary, most lenders require a DTI of 36% or lower, though in some cases borrowers can be qualified with a DTI of up to 50%. Generally speaking, though, the lower your DTI, the better; even if you can qualify with a higher amount of debt, it’ll be more difficult to make your monthly payments.

$700,000 Mortgage Breakdown Examples

As we’ve seen above, in order to qualify for a $700,000 mortgage loan, you’ll likely need a household income of at least about $180,000 per year — although again, whether or not you qualify will depend on many factors aside from your income, like your credit score and existing level of debt.

One way to get a good sense of how much house you can afford at your current income level is to use a home affordability calculator. If you toggle the “advanced” settings, you can also include costs like homeowners insurance and property taxes along with your income and existing debts. The calculator will spit out an estimate of how much house you can afford given all these circumstances — but remember, again, that this is only an estimate and not a guarantee.

Pros and Cons of a $700,000 Mortgage

Like any financial product (and anything in life), a $700,000 mortgage has both drawbacks and benefits to consider. Here are a few to keep in mind.

Pros of a $700,000 Mortgage

•   Home appreciation may pay for the amount you spend in interest and prove a worthwhile investment

•   Home ownership offers stability

•   If you make timely payments, your mortgage could reflect positively on your credit history — and boost your credit score over time

Cons of a $700,000 Mortgage

•   A mortgage is still a form of debt, and you will pay for the loan in the form of interest

•   When you own your home, you’re responsible for any and all maintenance and repairs — which isn’t true for those who rent

•   Depending on your interest rate, you may end up paying far more than the original home price over the loan’s lifetime

How Much Will You Need for a Down Payment?

There’s an old rule of thumb that states you should save up at least 20% of the home’s purchase price for a down payment. On a property listed for more than $700,000, that would come out to at least $140,000 — a pretty sizable chunk of change to save up!

However, these days, even conventional loans allow some first-time borrowers to put down as little as 3.00% on their home purchase — which, in this case, comes out to a far more reasonable $21,000. There is a caveat to be aware of, though: Borrowers who put down less than 20% will likely be required to pay PMI, which can add a few hundred dollars a month to your mortgage payment. Still, for those who have the cash flow to support this additional cost, it can be a worthy trade for earlier access to homeownership.

Can You Buy a $700K Home With No Money Down?

Some mortgage programs do allow borrowers to take out a mortgage with no money down — though you may have to meet certain eligibility requirements to qualify. For example, government-backed loans from the U.S. Veterans Administration (VA) and U.S. Department of Agriculture (USDA) loans don’t have a minimum required down payment, though these are only available to service members, veterans, and their families or to those looking in designated rural areas, respectively.

Is a $700K Mortgage With No Down Payment a Good Idea?

Even if you do qualify for a $700,000 mortgage with no down payment, it may not be the best idea financially speaking. Along with potentially being on the hook for the additional expense of mortgage insurance, you’ll start out with very low equity in your new investment, and your monthly payments may be substantially higher than they would be otherwise.

Can You Buy a $700K Home With a Small Down Payment?

Short answer: Maybe! As we’ve discussed, your ability to qualify for a mortgage is multifactorial, and the size of your down payment is only one of the many pieces mortgage lenders will consider. If the rest of your application is solid, a lender may qualify you for a $700,000 mortgage with a down payment as low as 3.00% ($21,000) if you’re a first-time homebuyer. Again, though, the only way to know for sure is to actually apply.

Can’t Afford a $700K Mortgage With No Down Payment?

If you’re not yet in financial shape to afford a $700,000 mortgage, or the process of saving up a down payment is getting you, well, down, there are steps you can take to get ready to make the purchase.

Pay Off Debt

It may be one of the most common tips to qualify for a mortgage — but it’s for good reason. Having even a small amount of debt can seriously impact your buying power, so paying off what you can and lowering your DTI can go a long way toward making a larger mortgage possible.

Look into First-Time Homebuyer Programs

If you’re a first-time buyer, it’s worth looking into first-time buyer programs that may be able to help you with your down payment or qualify you for a mortgage when you might otherwise not. One of the best-known first-time homebuyer programs is the FHA mortgage, which is backed by the Federal Housing Administration and may help you qualify even with a lower credit score.

Build Up Credit

Along with lowering your overall debt, building up your credit score can also help you qualify for a lower interest rate — which, over the course of a 30-year loan, can translate to big savings. Even a percentage point difference could save you thousands of dollars in the long run, so taking the time to repair or strengthen your credit today may be a well-placed effort.

Start Budgeting

If you don’t yet have a budget, the time before you purchase a home is a great time to start one. After all, homeownership usually comes with its own slate of expenses, from repairs to maintenance items and more, so ensuring you know where your money is going will help you prepare to meet those financial needs. (And, in the meantime, you may find some areas where you can make cuts that will make the upfront expenses, like your down payment, more feasible.)

Recommended: Refinance Your Mortgage and Save

Alternatives to Conventional Mortgage Loans

While conventional mortgages are the most common — and one of the most affordable options for those who qualify — there are different types of mortgage loans to consider. For example, as discussed, if you’re a first-time homebuyer, you may be able to qualify for an FHA loan from the Federal Housing Administration, which helps buyers qualify with lower credit scores than a conventional loan requires.

USDA and VA loans are also viable options for those looking in rural areas or who are (or are married to) service members or veterans.

Mortgage Tips

Need more mortgage help? Visit a home loan help center to study up on everything from amortization to escrow.

The Takeaway

While it takes a higher income to qualify for (and successfully pay off) a $700,000 loan, for many borrowers, it’s within reach — especially once you’ve found the right lender. Getting a mortgage doesn’t only depend on your income. There are multiple factors in play and learning the right mix could land you in a new home.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much income do I need for a $700K mortgage?

While there’s no one set income level that will automatically qualify you for a $700,000 mortgage, using the rule of thumb that your housing payment should be no more than a third of your gross monthly income, you’ll likely need somewhere between $180,000 and $200,000 per year to qualify, depending on other factors like your interest rate.

What is the monthly payment on a $700K mortgage?

Specific payment amounts depend on a wide range of factors including the interest rate you qualify for, the property taxes in your location, and the size of your down payment. In an example where you’re purchasing a $750,000 home with a $50,000 down payment at a 7.00% interest rate, your monthly payment would be close to $4,700 before insurance or taxes.

Can I afford a million-dollar home if I make $100K?

Again, how much money you make is only one factor that qualifies you for a mortgage — no matter its size. That said, because of the size of the monthly payment of a large mortgage, a $100,000 salary likely wouldn’t be enough to get you into a million-dollar home.

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Photo credit: iStock/DMP

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

SOHL-Q224-1843070-V1

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If you earn at least $120,000 a year, you may be making enough to afford a $350,000 mortgage. But the amount lenders ultimately determine you can borrow will also depend on several other variables, including how much debt you have and your credit score.

Read on for a look at how much income may be needed to qualify for a $350,000 mortgage, how income fits into the overall mortgage equation, and how lenders typically decide how much mortgage a homebuyer can manage.

What Income Is Needed to Get a $350,000 Mortgage?

The home mortgage loan you can qualify for typically depends on how much the lender believes you can reliably pay back — and you can expect the loan company to run your financials through several different calculations to come up with that amount.

Home buyers tend to think the amount they’ll be approved for when they apply for a mortgage will be based mostly on their household income. But lenders may consider other important factors when deciding how much someone can borrow, including:

Reliability of Income

Yes, lenders will look at how much you earn to help determine if you can afford the monthly payments on the amount you hope to borrow. But they’ll also want to know how reliable that income is, so you may be asked how long you’ve had your job — or your business if you’re self-employed. Want to get an idea of where you stand before you apply for a mortgage? An online home affordability calculator can help you estimate if your income is high enough to afford a $350,000 loan.

Creditworthiness

Lenders also will check your credit score and credit reports to ensure you have a history of being financially responsible and paying your bills on time.

Down Payment Amount

Contrary to what many buyers believe, a 20% down payment isn’t required to get a home loan. First-time homebuyers may be able to put as little as 3% down — or even less, depending on the type of mortgage you plan to get. A larger down payment can help you lower your monthly payments, however. And it can show lenders that you’re serious about your investment.

Debt-to-Income (DTI) Ratio

You also can expect lenders to look at your existing monthly debts (credit cards, student loans, car payments, etc.) to assess whether you’ll be able to manage all those payments as well as a mortgage on your current income. The calculation used to compare your monthly debt payments with your monthly gross income is called your debt-to-income ratio (DTI = monthly debts ÷ gross monthly income).

What Is a Good Debt-to-Income Ratio?

The Consumer Financial Protection Bureau (CFPB) recommends that homeowners work toward maintaining a DTI ratio of 36% or less, and that’s the number mortgage lenders generally look for, as well. But some lenders may accept a DTI ratio of up to 43% — or even higher if the borrower can meet other criteria on certain types of loans.

What Other Factors Are Mortgage Lenders Looking For?

Besides your DTI, here are a few other basic formulas mortgage lenders — and you — may use to estimate how much you might be able to afford on your income.

The 28/36 Rule

The 28/36 rule combines two factors that lenders typically look at to determine how much mortgage you can afford: income and debt. The first number sets a limit of 28% of gross income as a home buyer’s maximum total mortgage payment, including principal, interest, taxes, and insurance. The second number limits the mortgage payment plus any other debts to no more than 36% of gross income.

For example: If your gross annual income is $120,000, that’s $10,000 per month. Using the 28/36 rule, that means you could aim for a monthly mortgage payment of about $2,800 — as long as your total monthly debt (including car payments, credit cards, etc.) isn’t more than $3,600.

The 35/45 Model

Another calculation lenders might look at is the 35/45 method, which recommends spending no more than 35% of your gross income on your mortgage and debt, and no more than 45% of your after-tax income on your mortgage and debt.

For example: Let’s say your gross monthly income is $10,000 and your after-tax income is about $8,000. In this scenario, you might spend around $3,500 to $3,600 per month on your debt payments and mortgage combined. This calculation allows for a larger mortgage payment if you aren’t carrying a lot of debt.

The 25% After-Tax Rule

If you’re nervous about keeping up with your payments, this method will give you a more conservative number to work with. With this calculation, your target is to spend no more than 25% of your after-tax income on your mortgage.

For example: If you make $8,000 a month after taxes, you might plan to spend $2,000 on your mortgage payments.

Keep in mind that these equations can only give you a rough idea of how much you’ll be able to borrow. When you want to be more certain about the overall price tag and monthly payments you can afford, it may help to go through the mortgage preapproval process.

What Determines How Much House You Can Afford?

Here’s something else to think about when determining how much income is needed for a $350,000 mortgage: A house payment generally isn’t limited to just principal and interest. And the extra costs that may be tacked on every month can add up fast. The costs covered by a monthly loan payment can include:

Principal

Principal is the original amount borrowed to buy the home. Each month, a portion of your payment will go toward paying down this amount.

Interest

Interest is the money you pay to the lender each month for giving you the loan. The interest rate you pay can be influenced by personal factors (such as the loan length you choose, your credit score, and your income) as well as general economic and market factors.

Homeowners Insurance

The cost of homeowners insurance (coverage that protects your home and other assets against various risks), also may be rolled into your monthly mortgage payment. Your lender will pay the premium when it’s due.

Mortgage Insurance

Depending on the type of loan you have and the amount you put down on your home, you may be required to carry private mortgage insurance (PMI) or some other type of mortgage insurance policy. This insurance is designed to protect the mortgage lender if a borrower can’t make the agreed upon loan payments.

Property Taxes

A portion of your monthly mortgage payment will also go toward the property taxes you’ll need to pay your local government.

Recommended: Home Loan Help Center

$350,000 Mortgage Breakdown Examples

The monthly payment on a $350,000 mortgage can vary based on several factors, including the length of the loan (usually 15, 20, or 30 years), the interest rate, and other costs. A mortgage calculator can help you get an idea of what your payments might look like. Here are some examples of how payments for a $350,000 mortgage might break down.

30-Year Loan at 6.00% Fixed Interest Rate

Total Payment: $2,801
Principal and Interest: $2,098
Other Costs (estimated PMI, homeowners insurance, and property taxes): $703

15-Year Loan at 6.00% Fixed Interest Rate

Total Payment: $3,657
Principal and Interest: $2,954
Other Costs (estimated PMI, homeowners insurance, and property taxes): $703

30-Year Loan at 7.00% Fixed Interest Rate

Total Payment: $3,032
Principal and Interest: $2,329
Other Costs (estimated PMI, homeowners insurance, and property taxes): $703

15-Year Loan at 7.00% Fixed Interest Rate

Total Payment: $3,849
Principal and Interest: $3,146
Other Costs (estimated PMI, homeowners insurance, and property taxes): $703

Pros and Cons of a $350,000 Mortgage

According to Redfin, the median sale price in the U.S. in April 2024 was $432,903 — which means finding a home with a $350,000 mortgage might be a challenge, depending on where you live. But if you can manage it — by searching for a lower-cost home or putting more money down — you could benefit from lower monthly payments. And depending on your income and other factors, it may be easier to qualify for a mortgage in this amount than for a larger loan.

Another plus: You’d be getting your foot in the door of homeownership, and that can mean building equity for the future.

Recommended: Best Affordable Places to Live in the U.S.

How Much Will You Need for a Down Payment?

A down payment typically ranges from 3% to 20% of the purchase price. The amount you’ll be required to put down may vary based on the type of mortgage loan you get.

Can You Buy a $350,000 Home with No Money Down?

You may be able to get a $350,000 mortgage with a 0% down payment if you can qualify for a government-backed loan from the U.S. Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA). These loans are insured by the federal government — which means the government will help pay back the lender if the borrower defaults on the loan.

Not all lenders offer these programs, and borrowers must meet specific requirements to qualify for a USDA or VA loan. But if you think you may be eligible, this could be an option that’s worth looking into.

Can You Buy a $350,000 Home with a Small Down Payment?

Some private lenders will accept as little as 3% down on a conventional loan — so don’t feel as though you have to come up with 20% down before you can pursue homeownership. You might want to check out the requirements for a government-backed FHA loan, which also allows borrowers to make a small down payment. Or you may be able to find a state or local program that offers down-payment assistance.

Is a $350,000 Mortgage with No Down Payment a Good Idea?

Coming up with even a small down payment can be a hurdle when it comes to homeownership — especially for first-time homebuyers — and the thought of skipping that step can be appealing. Avoiding a down payment may help you get into a home faster or allow you to hold onto your savings for renovations, an emergency fund, or other financial goals.

It’s important to keep in mind, though, that without a down payment it can take longer to build up equity in your home. And because you’re borrowing more money, you also could end up paying more interest over the life of the loan. Also, although you won’t have to pay for mortgage insurance with a no-down-payment government-backed loan, you can expect to pay an upfront funding fee for a VA loan and an upfront and annual guarantee fee for a USDA mortgage.

A mortgage professional can help you evaluate the different types of mortgage loans and determine the best move for your individual circumstances.

What I\if You Can’t Afford a $350,000 Mortgage Even With No Down Payment?

Here are a few steps to consider if it turns out you can’t afford the payments on a $350,000 mortgage:

Pay Off Debt

If your DTI ratio needs work, you may want to press pause on your home search and focus on paying down recurring debts like credit cards, car payments, or a personal loan. This could allow you to put more of your monthly income toward your mortgage payments.

Build Up Your Credit

Checking your credit reports can give you an idea of what lenders might see when they evaluate your credit. If there are any errors, you can take steps to get them fixed. And if you see something negative in your reports, you can work on doing better. If you use a credit-score monitoring service, you may already know what your credit score is and if it needs a boost. Conventional lenders typically look for a minimum score of 620 to 640.

Start Budgeting

Creating a budget and trimming some expenses could help you reach your debt-payment and savings goals. Remember: If you can come up with a bigger down payment, you may be able to borrow less and keep your monthly payments to a more reasonable amount.

Alternatives to Conventional Mortgage Loans

If you can’t qualify for a conventional mortgage loan, you may have some alternatives to consider. Here are a few potential options:

Look into First-time Homebuyer Programs

As mentioned above, you may qualify for a federal, state, or local first-time homebuyer program that can help lower your down payment, closing costs, and other expenses. There may be limits on the type of home you can buy or a cap on the home’s cost. But you might find it’s worth doing some research, or asking a mortgage professional, to see if you’re eligible and could benefit.

Rent-to-Own

Another option may be to enter into an agreement to rent-to-own a home. With this type of arrangement, you start out renting, but the landlord agrees to credit a portion of your monthly payment toward purchasing the home. This can be a good way to start working toward homeownership if you can’t qualify for a mortgage. But it’s important to understand the downsides of the deal — including that you might lose money if you change your mind about buying the home, or if the landlord has second thoughts about selling.

Owner Financing

With owner financing, the person who’s selling the home may serve as the lender for all or part of the purchase price. Just as with a rent-to-own home, there are risks to this kind of agreement, but it can make homeownership possible if a traditional loan isn’t available.

Mortgage Tips

No matter how much you plan to borrow, buying a home is a big step. Here are a few things you may want to do to prepare:

Work Out Your Housing Budget

Remember, your housing costs won’t be limited to principal and interest. It’s important to determine how much you might pay for insurance, taxes, HOA dues, maintenance, and other expenses before you make the leap to homeownership.

Find the Mortgage That Best Suits Your Needs

This may include deciding whether you want a:

•   fixed vs. variable interest rate

•   conventional vs. government-backed loan

•   shorter vs. longer term loan

Get Preapproved

Going through the mortgage preapproval process with a lender can give you a better idea of how much you can afford to spend on a home. And having preapproval may give you an edge over other house hunters in a tight market.

The Takeaway

Obtaining a mortgage is just one of many steps in the homebuying process, but it’s important to get it right. Taking the time to do some research and to think about the total picture of your finances and monthly expenses could keep you from getting in over your head — or locked into a loan that isn’t a good fit.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much income do you need to qualify for a $350,000 mortgage?

If you make at least $120,000 a year, you may be able to manage the payments on a $350,000 mortgage, depending on how much debt you’re carrying and other variables.

Can I afford a $350,000 house on a $70,000 salary?

If you have enough saved for a large down payment and/or you’re carrying little or no debt, you might be able to afford a $350,000 house on a $70,000 salary, but it could be an uncomfortable squeeze to make the monthly payments.

Can I afford a $350,000 house on a $60,000 salary?

If you can afford a very large down payment, you may be able to afford a $350,000 house on a $60,000 salary, but without other sources of income beyond your salary, getting a mortgage and keeping up with your monthly payments could be difficult.

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Photo credit: iStock/zamrznutitonovi

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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