A $100,000 mortgage comes with a monthly payment around $840. Your lender will look for income in the $28,000 range to make that monthly payment, assuming you don’t have debt already from a car payment or student loan, for example. This number assumes a 6.5% interest rate on a 30-year loan and includes an estimate for the principal amount, interest, taxes, and insurance.
If you’re wondering how we got to this income level, you’ll want to stick around to see exactly how to get the mortgage you need for the home you want. We’ll go through everything you should know about the income required for a $100,000 mortgage.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Income Needed for a $100,000 Mortgage
The income needed for a $100K home mortgage loan depends on your existing debt and down payment. The amount you’ll qualify for goes up and down based on how much you owe and how much you’re willing to put down. (This is where a home affordability calculator comes in handy.)
For example, if you put down $25,000 on a property that costs $125,000, your $100,000 mortgage works out to about $840 monthly, including principal, interest, taxes, and insurance on a 6.5% annual percentage rate (APR). That $840 should be at maximum 36% of your monthly income (assuming you have no debt), which means you need to make at least $2,333 per month, or $28,000 per year, to afford the payment.
Of course, your existing debt affects your $100,000 mortgage: If you’re carrying $400 in additional debt each month, you’ll need more income to qualify for the loan. Here’s a look at the math:
$840 mortgage + $400 additional debt = $1,274 total monthly debt
$1,274 is 36% of $3,539 per month, or $42,468 per year.
In other words, if you have $400 in debt and are looking for a $100,000 mortgage, you’ll need to earn $42,468 per year.
For the most accurate numbers, try using a mortgage calculator with taxes and insurance.
How Much Do You Need to Make to Get a $100K Mortgage?
To recap: For a $100,000 mortgage, you need to make a minimum of $29,138 per year. To get this number, we calculated the percentage of income based on the 28/36 rule of thumb, which states that mortgage payments should be 28% or less of your gross income and no more than 36% of your total monthly debts. Thus, if you have no debt, a lender could approve a monthly payment that is 36% of your income. Some lenders may be even more generous with these ratios.
A $100,000 mortgage at a 7% interest rate on a 30-year term with estimated taxes and insurance works out to be $874. Working backward, we find that $874 is 36% of $2,428 per month, or $29,138 per year.
Keep in mind, that number is without other debt. If you have a car loan or credit card bills, you’ll need to make a higher income.
What Is a Good Debt-to-Income Ratio?
Lenders look for debt levels below 36%, but your chances of qualifying for the mortgage you want improve drastically if you have a minimal amount of debt. Conversely, with a lot of debt, the loan amount you qualify for is much lower.
What Determines How Much House You Can Afford?
Qualifying for a mortgage involves balancing the following factors:
• Income. Your income is one of the most important factors in determining how much house you can afford. Generally, the higher your income, the more house you can afford. But it’s not the only factor.
• Debt. Debt is a huge factor in determining how much house you can afford. Every monthly debt payment you have is calculated in your debt-to-income ratio. When you have too much debt, you’ll struggle to qualify for the mortgage you want.
• Down payment. The higher your down payment, the higher purchase price you can take on. It also changes how much you’ll qualify for because a 20% down payment eliminates mortgage insurance.
A million dollar mortgage seems like a high mark, but if you’re in a state with a high cost of living, it can be relatively common. If you do need to borrow that much, you’ll also likely need a jumbo loan, also called a nonconforming loan, which usually has more stringent requirements.
Whatever amount you need to borrow, take a look at a mortgage calculator or talk to a lender to take your individual situation into account and get the most accurate number.
What Mortgage Lenders Look For
To qualify for a $100,000 mortgage, you’ll want to look like a reliable borrower to the lender. For the best rates on a $100,0000 mortgage, lenders are going to look closely at the following factors:
• Credit history. A credit history full of on-time payments, low credit balances, and only necessary credit inquiries is going to look great to a lender. If your credit has some imperfections, it may still be possible to get a mortgage for a $100,000 home.
• Debt-to-income ratio. If you have too much debt, a lender isn’t going to approve you, no matter how high your credit score is. If you don’t meet the lender’s debt-to-income (DTI) ratio, you may be out of luck. Pay off some debt and try to qualify in the future.
• Income. Income is the biggest factor that affects your odds of approval. Lenders want to see that you make enough to pay back the loan.
• Down payment. A higher down payment represents less risk to the lender, and you may be rewarded with a lower interest rate on your mortgage. Remember that if you qualify for a mortgage but not at the best possible interest rate, you can consider refinancing in the future.
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$100,000 Mortgage Breakdown Examples
To illustrate the income needed for a $100,000 mortgage, we’ve put together a few scenarios. All assume a 7% APR, but different debt levels will affect how much you qualify for. Keep in mind the taxes and insurance numbers may not reflect your area. The cost of home insurance in Florida, for example, is going to be much higher than in Utah.
When you break down a $100,000 mortgage, it will look similar to this:
Terms
• Home purchase price: $125,000
• Down payment: 20% or $25,000
• Mortgage amount: $100,000
• APR: 7%
Monthly payment: $874
• Principal and interest: $665
• Taxes and insurance: $209
If you don’t have a down payment, it’ll look more like this:
Terms
• Home purchase price: $100,000
• Down payment: 0% or $0
• Mortgage amount: $100,000
• APR: 7%
Monthly payment: $924
• Principal and interest: $665
• Private mortgage insurance: $92
• Taxes and insurance: $164
You’ll notice that you have to pay PMI, an increase of $94. (PMI is required when the down payment is less than 20%.) However, taxes and insurance may be lower because you’re purchasing a less expensive property.
Recommended: Home Loan Help Center
Pros and Cons of a $100,000 Mortgage
When comparing the different types of mortgage loans, there are some benefits and drawbacks to a $100,000 mortgage.
Pros
• Low monthly payment
• May be easier to qualify for than a higher mortgage
• Mortgage insurance premiums are smaller for lower mortgages
• May allow home ownership vs. renting
Cons
• Appreciation may come more slowly
• A lower-priced house may not suit your needs in a few years
• You might be buying a fixer-upper
How Much Will You Need for a Down Payment?
For a $100,000 mortgage, you may be able to qualify for loans with 0% down payment options. The chart illustrates several loan types and the minimum down payment required for each.
| Loan type | Minimum down payment | Amount for a $100,000 loan |
|---|---|---|
| Conventional | 3% | $3,000 |
| Federal Housing Administration (FHA) | 3.5% | $3,500 |
| U.S. Department of Veterans Affairs (VA) | 0% | $0 |
| U.S. Department of Agriculture (USDA) | 0% | $0 |
If you’re able to put down 20%, you’ll be able to avoid PMI, which is arguably the most hated fee on a mortgage. (If you have it, you’ll want to get rid of it as soon as possible.)
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Can You Buy a $100K Home With No Money Down?
There are some scenarios where you’ll be able to buy a $100,000 home with no money down. These options have 0% down payment requirements for borrowers who qualify.
0% Down Payment Mortgages
• VA mortgages. VA mortgages are for qualified veterans and service members. A certificate of eligibility (COE) based on service and duty status is required. These loans have no down payment requirement.
• USDA mortgages. USDA mortgages, designed for low- and moderate-income borrowers in rural areasm have no down payment requirement. The interest rate is comparable to a conventional loan, and the mortgage insurance is much lower than the FHA’s. It’s a good deal, so if you live in one of these areas, you’ll want to look more closely at this option.
Can You Buy a $100K Home With a Small Down Payment?
If you can find a $100K house, there are several ways to pull off a small down payment.
• Conventional mortgages. Conventional mortgages have options for down payments as low as 3% of the purchase price. These loans require mortgage insurance, but do allow for it to drop off once the mortgage reaches 20% equity.
• FHA mortgages. FHA mortgages allow for down payment options as low as 3.5% of the purchase price. The mortgage insurance is more costly and doesn’t ever go away, but FHA loans have more flexibility when it comes to credit requirements.
The other options for 0% down payment mortgages — VA loans and USDA loans — also apply here.
Is a $100K Mortgage with No Down Payment a Good Idea?
Absolutely. If you can find a home that requires just a $100K mortgage and can afford the payment, then a no-down-payment mortgage is a good idea. This is especially true if it can help you get into a home sooner.
A $100K mortgage with no down payment does come with a higher monthly payment because of the higher mortgage amount and required mortgage insurance premium.
Can’t Afford a $100K Mortgage With No Down Payment?
If you can’t afford a $100K mortgage with no money down, we have a few tips to help you qualify for a mortgage.
Pay Off Debt
Paying off debt is the secret formula to help you afford a home. When your debt is paid off, your lender doesn’t need to count anything toward your monthly debts. This leaves you with the ability to qualify for a higher mortgage amount.
Look into First-Time Homebuyer Programs
First-time homebuyer programs can help with down payment and closing costs assistance, homebuyer education, and rate buydowns. Most cities and states have some type of program to help first-time homebuyers, so you’ll want to research the program available in your local area.
Care for Your Credit Score
Your credit history is a key piece of the puzzle your lender is putting together, and it takes time to build. These ideas can help.
• Check your credit report. Errors on a credit report are common. You’ll want to take a good look and see if there’s anything you can do to take better care of your credit. Can you pay off an account? Can someone add you as an authorized user on their account to help build your credit history?
• Consider opening a credit account. You need to use credit to build it. If you have a limited credit history, consider opening a credit card or applying for a credit-builder loan. Pay your bill on time each month, and you’ll be on your way to building credit.
• Automate your payments. Use your bank’s bill pay function to automate your payments. You’ll never miss a payment and build your credit history with beautiful, on-time payments.
Start Budgeting
Budgeting sounds boring, but tracking your money is the best way to get better control of it. When you know where your money is going, you can do powerful things with it. That includes saving a little bit every month for a down payment on a house.
Alternatives to Conventional Mortgage Loans
If you’re looking at alternatives to a conventional mortgage, here are some places to look:
• Private lending. Private lenders may be able to help borrowers with special circumstances. You might pay a higher interest rate, but the lender also might have more flexible qualifications.
• Seller financing. It’s possible to enter into an agreement with a seller where you pay them directly instead of the bank. Buyer and seller will agree upon the details privately.
• Rent-to-own. Along the same lines as seller financing is the rent-to-own option, where the seller agrees to finance the property before the buyer is able to purchase it.
Mortgage Tips
Finding a mortgage that suits your needs is important. Here are a few quick tips to get you through the process of choosing a lender and finding the right mortgage for you.
• Shop around. Different lenders have different mortgages, so be sure to shop around to find a mortgage with a rate, term, and conditions that work for you.
• Compare loan estimates. Ask each lender you’re considering for a loan estimate and be sure to submit the same information to each lender (loan amount, loan type, etc.). This will give you a standard form from each lender that can help you compare the fees, interest rates, and terms of each loan offered before you go through the mortgage preapproval process.
• Go with a reputable lender. It’s hard to know if a lender is going to be good from the get-go, but you can read reviews on Trustpilot and the Better Business Bureau to get an idea of what closing a loan with the company is going to be like.
The Takeaway
Affording a $100,000 mortgage requires reliable income, the right debt-to-income ratio, and healthy credit. There are a number of zero down payment mortgages that can aid your mission to buy a home. For most people around the country, the biggest problem is likely going to be finding a $100,000-$125,000 home. When you do find a home at an affordable price, you’ll need a minimum of $29,000 in income to qualify for the mortgage.
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.
FAQ
How much house can I afford if I make $36,000 a year?
With an income of $36,000 per year, or $3,000 a month, going by the 28/36 rule, the amount of mortgage you’re looking for is between $840 and $1,080. With a 7% interest rate and homeowner’s insurance and taxes, that puts your purchase price at a maximum of $140,000, assuming you have no other debts.
What is the monthly payment on a $100K mortgage?
A monthly payment for a $100K mortgage sits at a little more than $900. This amount includes principal, interest, taxes, insurance, as well as mortgage insurance.
How much home loan can I get if I make $100K?
Without debt, the amount of mortgage you may qualify for if you make $100K is around $325,000. If your monthly income is $8,333, 36% of that amount is $3,000 that can go toward a housing payment. At a 7% interest rate, that works out to be about a $325,000 loan.
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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.
*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.
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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.
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