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How Much Income You Need to Buy a $200k, $300k, and $400k House

How much income needed for 200k 300k 400k home

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 took all this into consideration to estimate how much you need to make to buy a $200k, $300k, or $400k home.

For all calculations, we’ll assume property taxes of 1% of the home price per year and $125 per month in homeowner’s insurance, and mortgage insurance rates from MGIC. 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 interest rate of 7.158% (the average according to Mortgage Research Center’s rate tracker at the time of writing), you will want to earn at least $4,544 per month – $54,528 per year – to buy a $200,000 house. This is based on an estimated monthly mortgage payment of $1,636.

Income Needed With Other Debt for a $200k House

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

$1,636

$1,636

$1,636

Other Debt Payments

$500

$750

$1,000

Total Monthly Debt

$2,136

$2,386

$2,636

Monthly Income Needed to Qualify

$4,747

$5,302

$5,858

Income Needed at Different Interest Rates for a $200k House

Your interest rate significantly impacts your monthly payment, which in turn affects how much income you'll need to earn to purchase a $200k home. Here is what your payments and required income could look like at various rates.

Interest Rate

Estimated Payment (PITI)

Required Income (36% Front-End DTI)

5.0%

$1,372

$3,811

5.5%

$1,431

$3,975

6.0%

$1,491

$4,142

6.5%

$1,553

$4,314

7.0%

$1,616

$4,489

7.5%

$1,680

$4,667

8.0%

$1,746

$4,850

8.5%

$1,813

$5,036

9.0%

$1,881

$5,225

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 less you’ll spend each month on your mortgage and the lower the income you'll need 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.

Home Value

$200,000

$200,000

$200,000

Down Payment

10%

15%

20%

Amount Financed

$180,000

$170,000

$160,000

Monthly Payment

$1,550

$1,468

$1,373

Minimum Monthly Income

$4,306

$4,078

$3,814

How Much Income Do You Need to Buy a $300,000 House?

With a 5% down payment and an interest rate of 7.158% (the average at the time of writing), you will want to earn at least $6,644 per month – $79,728 per year – to buy a $300,000 house. This is based on an estimated monthly mortgage payment of $2,392.

Income Needed With Other Debt for a $300k House

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

$2,392

$2,392

$2,392

Other Debt Payments

$750

$1,000

$1,250

Total Monthly Debt

$3,142

$3,392

$3,642

Monthly Income Needed to Qualify

$6,982

$7,538

$8,093

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.

Interest Rate

Estimated Payment (PITI)

Required Income (36% Front-End DTI)

5.0%

$1,995

$5,542

5.5%

$2,083

$5,786

6.0%

$2,174

$6,039

6.5%

$2,267

$6,297

7.0%

$2,361

$6,558

7.5%

$2,458

$6,828

8.0%

$2,556

$7,100

8.5%

$2,657

$7,381

9.0%

$2,758

$7,661


Income Needed With a Larger Down Payment for a $300k House

You’ll need less income if you put more down on a home.

Home Value

$300,000

$300,000

$300,000

Down Payment

10%

15%

20%

Amount Financed

$270,000

$255,000

$240,000

Monthly Payment

$2,263

$2,139

$1,997

Minimum Monthly Income

$6,286

$5,942

$5,547

How Much Income Do You Need to Buy a $400,000 House?

With a 5% down payment and an interest rate of 7.158% (the average at the time of writing), you will want to earn at least $8,742 per month – $104,904 per year – to buy a $400,000 house. This is based on an estimated monthly mortgage payment of $3,147.

Income Needed With Other Debt for a $400k House

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

Total Monthly Debt

$4,147

$4,397

$4,647

Monthly Income Needed to Qualify

$9,216

$9,771

$10,327


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%.

Interest Rate

Estimated Payment (PITI)

Required Income (36% Front-End DTI)

5.0%

$2,619

$7,275

5.5%

$2,736

$7,600

6.0%

$2,857

$7,936

6.5%

$2,981

$8,281

7.0%

$3,107

$8,631

7.5%

$3,236

$8,989

8.0%

$3,367

$9,353

8.5%

$3,501

$9,725

9.0%

$3,636

$10,100

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.

Home Value

$400,000

$400,000

$400,000

Down Payment

10%

15%

20%

Amount Financed

$360,000

$340,000

$320,000

Monthly Payment

$2,976

$2,810

$2,621

Minimum Monthly Income

$8,267

$7,806

$7,281

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 7.158% - the current 30-year conventional average (at the time of writing) on the Mortgage Research Center homepage

  • A down payment of 5% of the purchase price

  • Lenders allowing a 36% front-end (housing) DTI and a 45% back-end (total) DTI

  • Annual taxes equal to 1% of the purchase price

  • Mortgage insurance costs from MGIC, based on a credit score of 760

  • Homeowners insurance with a monthly premium of $125

  • No required homeowners association dues

  • Closing costs that 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.

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

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 – especially if your income is right on the cusp of our estimates – is to check the current mortgage rates and apply with a well-reviewed lender for a personalized quote.

Get your quote here.

About The Author:

Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.

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