Income Needed to Buy a $200k, $300k, and $400k House
Determining how much home you can afford takes more than just plugging numbers into a loan calculator. You'll want to consider taxes, insurance, mortgage insurance, down payment, and more.
We considered all this to estimate how much you need to make to buy a $200k, $300k, or $400k home.
In summary, here’s what we found:
You need to make at least $54,000 per year to afford a $200,000 house
You need to make at least $80,000 per year to afford a $300,000 house
You need to make at least $108,000 per year to afford a $400,000 house
For calculations, we assumed property taxes of 1.2%, homeowner’s insurance of 0.35%, mortgage insurance rates from MGIC, and an example rate of 6.7%, an average from the MortgageResearch.com homepage rate tracker (how we track rates) at the time of the most recent update. We assumed debt ratios of 36% of gross income for the total house payment and 45% for all debt including housing. This helps you buy more home versus using the more conservative 28/36 rule.
See the full methodology at the end of this article.
How Much Income Do You Need to Buy a $200,000 House?
With a 5% down payment and an example interest rate of 6.7%, you will want to earn at least $4,500 per month – $54,000 per year – to buy a $200,000 house. This is based on an estimated total monthly house payment of $1,610.
Income Needed for a $200k House With Higher Debt
Our calculations for the income needed to buy a $200k house assume you have around $400 (or less) in other monthly debts. If your recurring payments are higher, you'll need more income to qualify for a mortgage.
Mortgage Payment | $1,610 | $1,610 | $1,610 |
Other Debt Payments | $500 | $750 | $1,000 |
Monthly Income Needed to Qualify | $4,750 | $5,250 | $5,833 |
Annual Income Needed to Qualify | $57,000 | $63,000 | $70,000 |
Income Needed at Different Interest Rates for a $200k House
Your interest rate significantly impacts your monthly payment, affecting how much income you'll need to earn to purchase a $200k home. The following assume 5% down, estimated taxes and insurance, and $400 in non-housing monthly debt payments.
Interest Rate | Estimated Payment (PITI) | Annual Income (36% Housing DTI) |
5.0% | $1,400 | $48,000 |
5.5% | $1,450 | $49,000 |
6.0% | $1,500 | $51,000 |
6.5% | $1,580 | $53,000 |
7.0% | $1,650 | $55,000 |
7.5% | $1,700 | $57,000 |
8.0% | $1,775 | $59,000 |
See how much you can afford with our Income-Based Calculator
Income Needed With a Larger Down Payment for a $200k House
Are you able to put down more than 5% towards your purchase? The larger your down payment, the lower your required income to qualify. Here are some payments and required incomes that you could be looking at for a $200,000 home based on a 10%, 15%, or 20% down payment. Note that mortgage insurance isn’t required with 20%, increasing affordability substantially. Other assumptions are the same as above.
Home Value | $200,000 | $200,000 | $200,000 |
Down Payment | 10% | 15% | 20% |
Est. PITI Payment | $1,650 | $1,425 | $1,300 |
Minimum Income | $50,000 | $48,000 | $45,000 |
How Much Income Do You Need to Buy a $300,000 House?
With a 5% down payment and an interest rate of 6.7% (the average at the time of writing), you will want to earn at least $6,667 per month – $80,000 per year – to buy a $300,000 house. This is based on an estimated total house payment of $2,400.
Check your home buying power using your exact income with this calculator
Income Needed for a $300k House With Higher Debt
Our calculations for the income needed to buy a $300k house assume you have around $600 (or less) in other monthly debts. If your recurring payments are higher, you'll need more income to qualify for a mortgage.
Mortgage Payment | $2,400 | $2,400 | $2,400 |
Other Debt Payments | $750 | $1,000 | $1,250 |
Monthly Income Needed to Qualify | $7,083 | $7,583 | $8,167 |
Annual Income Needed to Qualify | $85,000 | $91,000 | $98,000 |
See how much you qualify for by speaking with a lender here.
Income Needed at Different Interest Rates for a $300k House
Your interest rate significantly impacts your monthly payment, which in turn affects how much income you'll need to earn to purchase a $300k home. The following assumes 5% down, estimated taxes and insurance, and $600 in non-housing monthly debt payments.
Interest Rate | Estimated Payment (PITI) | Annual Income (36% Housing DTI) |
5.0% | $2,100 | $72,000 |
5.5% | $2,200 | $75,000 |
6.0% | $2,275 | $77,000 |
6.5% | $2,375 | $79,000 |
7.0% | $2,450 | $82,000 |
7.5% | $2,550 | $85,000 |
8.0% | $2,650 | $87,000 |
Income Needed With a Larger Down Payment for a $300k House
You’ll need less income if you put more down on a home. See assumptions above.
Home Value | $300,000 | $300,000 | $300,000 |
Down Payment | 10% | 15% | 20% |
Est. PITI Payment | $2,250 | $2,150 | $1,950 |
Minimum Income | $76,000 | $74,000 | $68,000 |
How Much Income Do You Need to Buy a $400,000 House?
With a 5% down payment and an interest rate of 6.7% (the average at the time of writing), you will want to earn at least $9,000 per month – $108,000 per year – to buy a $400,000 house. This is based on an estimated monthly all-inclusive house payment of $3,240.
Income Needed for a $400k HouseWith Higher Debt
Our calculations above for the income needed to buy a $400k house assume you have around $800 (or less) in other monthly debts. But what if your debts like auto and student loans require larger payments?
Mortgage Payment | $3,147 | $3,147 | $3,147 |
Other Debt Payments | $1,000 | $1,250 | $1,500 |
Monthly Income Needed to Qualify | $9,417 | $9,917 | $10,500 |
Annual Incoem Needed to Qualify | $113,000 | $119,000 | $126,000 |
See how much you can afford based on your income with this calculator.
Income Needed at Different Interest Rates for a $400k House
Your interest rate significantly impacts your monthly payment, which in turn affects how much income you'll need to earn to purchase a $400k home. Following is the estimated income required at various rates. You need to make about $3,000 more per month to afford the same home at an 8% rate versus 5%. The following assumes 5% down, estimated taxes and insurance, and $800 in non-housing monthly debt payments.
Interest Rate | Estimated Payment (PITI) | Annual Income (36% Housing DTI) |
5.0% | $2,800 | $96,000 |
5.5% | $2,925 | $99,000 |
6.0% | $3,050 | $102,000 |
6.5% | $3,160 | $106,000 |
7.0% | $3,300 | $110,000 |
7.5% | $3,420 | $115,000 |
8.0% | $3,550 | $118,000 |
Get a personalized rate quote from a lender.
Income Needed With a Larger Down Payment for a $400k House
Making a large down payment reduces your monthly payment, especially if you can reach 20% down. This eliminates mortgage insurance, lowering your overall payment considerably. Assumptions are the same as above.
Home Value | $400,000 | $400,000 | $400,000 |
Down Payment | 10% | 15% | 20% |
Est. PITI Payment | $3,000 | $2,850 | $2,600 |
Minimum Income | $101,000 | $96,000 | $90,000 |
What Debt Is Included in DTI?
Not every bill you pay will be included in your debt-to-income (DTI) calculations. You don't need to worry about your Netflix subscription or gym membership impacting your home purchasing power.
Instead, lenders are primarily focused on your housing expenses – including any taxes, insurance, and association dues – and other ongoing installment or court-ordered payments.
Some of the monthly expenses that are likely to be counted in your DTI include:
Mortgage costs (PITIA)
Car loans
Student loans
Personal loans
Credit card minimums
Alimony or child support payments
What Are the Biggest Factors Behind Home Affordability?
There is no set income level needed for each home price. Your personal profile and preferences determine how much you need to make. For example, someone with low debts can qualify for a lot more than someone with high debts, as we saw in the above examples. Here are other factors that affect affordability.
Down Payment and Loan-To-Value
A bigger down payment lowers your loan amount. This, in turn, reduces the principal and interest you owe each month. A 20% or greater down payment eliminates mortgage insurance costs, increasing affordability.
Your loan-to-value, or LTV, is the remaining loan balance versus the home price. For example, putting 10% down means you have a 90% LTV.
Interest Rates
Interest rates impact affordability greatly. In one of the above examples, a 1% drop in the interest rate on a $300,000 home means you can make about $8,000 less per year to afford the same house. Shop lenders to get the best rate possible for your situation.
Credit Score
The higher your credit score, the lower your rate will typically be, and the more house you can afford.
Debt-to-Income (DTI) Ratio and Non-Housing Debt
Most lenders let you have a debt-to-income ratio up to 43%, and even higher for some loan types. But this includes other debt payments like car loans and student loans. If you want to afford more house, pay off or refinance other debt to reduce or eliminate payments.
Financial Assistance
Down payment assistance programs, grants, or other forms of financial aid can reduce your loan amount, making the home more affordable.
Loan Type
Different mortgage types, such as FHA, USDA, VA, or conventional loans, have varying requirements and advantages. For instance, FHA loans allow for lower down payments, making homeownership more accessible.
Employment and Job Stability
Lenders look at your employment history and income stability when determining your eligibility for a mortgage. A stable job with consistent income makes it easier to qualify for a loan, while irregular income could lower your affordability.
Do You Qualify for a $200k, $300k, or $400k Home?
By this point, you should have a pretty good idea of how much income you need to buy a home for $200k, $300k, or $400k, although your actual figures could vary. Ultimately, the best way to know if you qualify for a home loan is to check the current mortgage rates and apply with a reputable lender for a personalized quote. You can also use our helpful mortgage calculators to see what your estimated monthly payment may come to based on your unique situation.
Methodology
Numerous variables go into determining your monthly cost and the income that you'd need to qualify for a loan. Different types of mortgages have different requirements, and each lender may impose unique qualifications.
To simplify things while still coming up with real-world figures, we've based our calculations (unless otherwise noted) on the following:
A 30-year fixed-rate conventional mortgage
An interest rate of 6.7% - the current 30-year conventional average (at the time of the most recent update) on the Mortgage Research Center homepage
5% down
Lenders allowing a 36% front-end (housing) DTI and a 45% back-end (total) DTI
Annual taxes equal to 1.2% of the purchase price
Mortgage insurance of 0.78% of the loan amount per year, rates from MGIC based on a 700 credit score
Homeowners insurance with an annual premium of 0.35% of the home price
No homeowners association dues
Closing costs are not wrapped into your loan and do not impact your available funds
Remember: With so many loan options out there, the numbers in this article aren’t set in stone. Some mortgage companies may be willing to fund loans with a back-end DTI of 50% or even higher. Others may have programs available to specific borrowers – such as lower-income or first-time homebuyers – that could offer interest rates and resulting payments lower than the average.
Tim Lucas is the editor and Lead Analyst for MortgageResearch.com. Tim spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. He has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.
