What’s the Revenue Wanted for a $400k Home?

For those who’ve received your eye on a $400,000 residence, you’re in all probability asking your self: How a lot home can I afford? The revenue wanted for a $400k mortgage comes down to some components, like your down cost, DTI, credit score rating, and even your location.

Whether or not you’re home trying to find a condominium in Boston, MA or a house in Phoenix, AZ, understanding how your funds affect affordability might help you propose properly. On this Redfin information, we’ll break down the numbers, components, and ideas that will help you purchase a $400,000 residence that works to your finances.

Most patrons must earn $100,000 to $135,000 per yr to afford a $400,000 residence.



This assumes common rates of interest, a regular mortgage time period, and a modest down cost.



Your precise revenue wants could differ based mostly in your debt, credit score rating, and month-to-month bills.

What’s the revenue wanted for a $400k home?

The final guideline is that your whole month-to-month housing prices mustn’t exceed 28% to 31% of your gross month-to-month revenue. These prices sometimes embody your mortgage cost (principal and curiosity), property taxes, householders insurance coverage, and any HOA charges.

To estimate the revenue wanted for a $400,000 residence, you’ll want to contemplate your down cost quantity, mortgage rate of interest, credit score rating, debt-to-income (DTI) ratio, and placement, since property taxes and insurance coverage premiums differ by area.

Instance situation

Let’s assume the next:

Dwelling value: $400,000



Down cost: 20% ($80,000)



Mortgage: $320,000 with a 30-year time period at 6.5% curiosity



Month-to-month prices: ~$2,522 (contains mortgage, taxes, insurance coverage)

Estimated month-to-month mortgage cost (principal + curiosity): ~$2,022

Whole estimated month-to-month housing price: $2,022 + $400 + $100 = $2,522

So, on this situation, you’d doubtless must earn round $108,000 per yr to comfortably afford a $400,000 residence whereas staying inside advisable housing price limits.

Needless to say in the event you put down lower than 20%, you’ll doubtless should pay personal mortgage insurance coverage (PMI), which is able to enhance your month-to-month prices—and if property taxes are larger, you’ll want a good larger revenue to qualify. 

Now, let’s take a better look.

Key components that have an effect on how a lot home you may afford

The revenue wanted for a $400k mortgage is determined by extra than simply your wage. A number of private and monetary variables can affect your potential to qualify for a mortgage and the quantity you’ll be accepted for.

1. Down cost

A bigger down cost reduces how a lot you’ll want to borrow, which lowers your month-to-month mortgage cost. For those who put down no less than 20%, you may as well keep away from paying personal mortgage insurance coverage (PMI), which is an added month-to-month price required by most lenders when your down cost is under that threshold. .

2. Debt-to-income ratio (DTI)

Your debt-to-income ratio (DTI) compares your whole month-to-month debt funds, together with issues like pupil loans, automobile loans, bank card minimums, and different obligations, to your gross month-to-month revenue.  Most lenders choose a DTI of 43% or much less, although many intention for 36% or decrease for extra favorable mortgage phrases.

Even in the event you earn a excessive revenue, a excessive DTI suggests you’re already carrying a big quantity of debt, which may make lenders hesitant to approve a big mortgage.

3. Rates of interest

Mortgage rates of interest have a direct affect on affordability. Even a 1% distinction can change your month-to-month cost by lots of of {dollars}. 

For instance, on a $400,000 residence with 20% down, a 6% rate of interest may imply a month-to-month cost of round $2,400, whereas a 7% charge may increase it to about $2,650; a $250 enhance. That additional price means you’ll want a better qualifying revenue.

As of June 2025, the typical 30-year fastened charge is round 7%, which is larger than charges seen in prior years. 

4. Credit score rating

Your credit score rating is a three-digit quantity that exhibits how reliably you’ve managed debt, based mostly in your cost historical past, credit score use, and forms of credit score. Your rating helps decide your rate of interest and total mortgage eligibility. The next rating sometimes leads to higher phrases.

740 and above: Wonderful credit score, more likely to qualify for one of the best charges



620-739: Acceptable for many lenders, although charges could also be larger



Under 620: Thought-about subprime; approval could also be tough with no bigger down cost or compensating components

Lenders view larger scores as much less dangerous, which might enhance your borrowing energy even when your revenue is on the decrease finish.

Learn>> How To Purchase A Home With Dangerous Credit score

5. Location and property taxes

Taxes differ considerably based mostly on the place you purchase. In some counties, likeWestchester County, NY and Cook dinner County, IL, annual property taxes may exceed $7,000 on a $400,000 residence. In different areas comparable to Maricopa County, AZ and Bexar County, TX, taxes could also be lower than $3,000. 

6. Different monetary obligations

Recurring obligations comparable to baby help, alimony, or private loans are included in your DTI and cut back the quantity you may spend on a mortgage. 

Ongoing prices comparable to property taxes, householders insurance coverage, and potential HOA charges must also be thought of, since they’ve a big affect in your total finances.

These must be factored into any affordability calculation.

What it takes to afford a $400,000 residence: side-by-side eventualities

Your potential to afford a $400,000 residence is determined by a number of key components: your down cost, credit score rating, mortgage charge, and current debt. Under is a comparability of three purchaser profiles as an example how these variables can have an effect on your month-to-month prices and required revenue.

Purchaser Profile
Down Cost
Credit score Rating
Charge
Debt
Month-to-month Cost (PITI)
Estimated Revenue


Conservative Purchaser
20% ($80,000)
Wonderful (760+)
6.50%
$300
~$2,550
~$95,000


Typical Purchaser
10% ($40,000)
Good (700–740)
6.75%
$600
~$2,950
~$110,000


Low Down Cost Purchaser
5% ($20,000)
Truthful (660–680)
7.00%
$750
~$3,250 (incl. PMI)
~$125,000

Professional tip: Speaking to a mortgage lender early on might help you estimate your affordability based mostly in your monetary scenario—and should even unlock higher charges or down cost help packages.

Ideas that will help you afford a $400k mortgage

Listed here are some sensible steps to enhance your shopping for energy and maintain month-to-month funds manageable:

Enhance your credit score rating: Paying payments on time, decreasing bank card balances, and avoiding new debt can enhance your rating and enable you qualify for higher mortgage phrases.



Pay down current debt: Reducing your DTI by paying off bank cards or small loans might help you qualify for a better mortgage quantity.



Examine a number of lenders: Charges and costs can differ extensively. Purchasing round offers you a clearer image of what you may afford.



Use a co-borrower: Including a partner or associate with revenue (and good credit score) could enable you qualify for a bigger mortgage.



Discover homebuyer help packages: Some state and native governments provide grants or favorable mortgage phrases for first-time residence patrons.



Get pre-approved early: Pre-approval offers you a transparent finances and exhibits sellers you’re a severe purchaser.

Learn>> What You Must Purchase a Home in 2025

FAQs: Your $400k mortgage questions answered

1. What if my DTI is 43%?

You should still qualify for a mortgage, however you may face stricter mortgage phrases or larger rates of interest. For those who’re close to the 43% threshold, contemplate decreasing or consolidating debt earlier than making use of for a house mortgage.

2. How can I calculate how a lot home I can afford?

To calculate your affordability, use the 28/36 rule. This rule suggests you retain housing prices beneath 28% of your gross month-to-month revenue and whole debt funds beneath 36%. On-line mortgage calculators might help you plug in your revenue, money owed, rate of interest, and down cost to estimate your value vary.

3. Ought to I embody HOA charges in affordability estimates?

Sure. HOA dues are thought of a part of your whole housing expense and are included within the DTI calculation by most lenders.

4. How does a 5% down cost change issues?

Your month-to-month mortgage cost will likely be larger and also you’ll doubtless must pay PMI. This will increase your required revenue to qualify.

5. The place can I discover $400,000 houses?

Use Redfin’s residence search device to discover listings in your goal space. You possibly can set value filters, view tax estimates, and get alerts for brand spanking new listings or value drops.

Planning forward pays off

Affording a $400,000 residence takes extra than simply hitting a sure revenue. With sensible budgeting, manageable debt, and skilled steerage, the revenue wanted for a $400k mortgage will be inside attain. For those who’re questioning the right way to purchase a house in 2025, begin by understanding your monetary image and exploring mortgage choices early.

A mortgage advisor might help simplify the method by breaking down mortgage varieties, bettering your software, and figuring out mortgage packages that suit your objectives. Having the best help could make all of the distinction find a house that really works for you.