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).
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
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.
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$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.
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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.
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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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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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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