Income Needed For 400k Mortgage With No Down Payment in 2025

You found your dream home priced around $400,000. The question now: can you afford it?

It depends. Your monthly payment will depend on a variety of factors:

• How much (or how little) your down payment is
• Interest rates
• Insurance
• Property taxes

Because of this, there’s no single “right salary to afford 400k house.” However, there are things you can do to figure out how much house you can afford. In this article, I’ll help you run through the numbers so you understand what it takes to secure a 400K mortgage. We’ll cover:

• What salary is needed?
• Is no down payment possible?
• What else do you need to consider?

Income Needed for 400K Mortgage: The Bottom Line

What’s the income needed for 400k mortgage? It depends on a few factors. For example:

• With a 25% down payment, you’ll need to earn a minimum of $96,300 annually to secure a $400k mortgage.
• With no down payment, the income needed for 400k mortgage will be higher — about $128,988 annually.

While these salary requirements may seem high, part of the reason is that currently, we’re experiencing historically high interest rates — close to 7%.

How Much Do You Need to Make to Get a $400K Mortgage?

Let’s break down the math using different values for the down payment.

So, how much do you have to make a year to afford a $400,000 house? And what will your monthly mortgage payments be?

House cost	Down Payment	Approximate Monthly Payment	Approximate Income Required
$400K	0%	$3,332	$128,988
$400K	10%	$3,071	$118,164
$400K	20%	$2,618	$101,340
$400K	25%	$2,487	$96,300

Can You Buy a $400K Home With No Money Down?

Is no down payment possible?

Yes.

There are instances where a $400K home can be purchased with no money down, though it’s not typical.

Two government-supported programs allow certain borrowers to obtain financing with no money down — USDA loans and VA loans.

USDA Loan

USDA loans are intended for low-to-moderate-income Americans residing in rural areas. The loans are offered by the United States Department of Agriculture.

USDA loans can be secured with no down payment and can often come with favorable interest rates versus conventional loans, despite the low down payment requirement.

VA Loan

Like USDA loans, VA loans can be obtained without a down payment. Also, VA loans do not require private mortgage insurance (PMI). PMI can easily add hundreds of dollars to your monthly mortgage payment. The catch? These loans are only available to veterans or those who have served and their family members. Be sure to research eligibility requirements before pursuing this type of mortgage.

Considerations — $400K Mortgage With No Money Down

Several factors contribute to your total monthly payment outside of a down payment, interest rate, and loan term.

We’ve been focusing on the topics of salary to afford 400K house, but there are other considerations to keep in mind.

Returning to the payment calculator table we listed above, recall some of the assumptions baked into the payment calculation (over and above the down payment, interest rate, and loan term.)

Let’s break them down…

Tax Rate

Your tax rate will vary depending on the state you reside in, but the average homeowner will have to pay 1.1% of their home value in taxes each year. On a $400K home, this works out to $367 per month.

Private Mortgage Insurance (PMI)

Typically, borrowers securing mortgages with a down payment of less than 20% will be required to pay private mortgage insurance or PMI. Private mortgage insurance protects the lender should the borrower be unable to repay their debt obligation.

Without PMI and a substantial down payment, lenders can be left with a significant loss if they have to sell the property in a down market if the borrower cannot make payments.

PMI can vary between 0.22% to 2.25%. Usually, larger mortgage values coupled with lower credit score borrowers drive higher PMI rates.

For the example quoted earlier, a PMI of 0.58% was used. On a $400,000 property, this works out to $174 per month.

Homeowners Insurance

Homeowners insurance is a type of property insurance. It covers losses and damages to a house and its contents, like appliances and furniture.

Homeowner’s insurance typically costs a borrower 0.5% of the home’s value annually. On a $400K home, this works out to $2,000 annually or roughly $167 per month.

Miscellaneous Costs

Homeowners quickly learn there are far more costs than the monthly mortgage payment. As a homeowner, you can often face large bills relating to repairs or upgrades.

For example, if your furnace fails during the coldest months of the winter, you likely will have no choice but to spend money on a potentially costly repair.

For this reason, it’s prudent to maintain a buffer of additional cash on hand. In other words, assume your monthly payment is even higher and pick the difference in a rainy day fund.

A good rule of thumb: aim to save 1% of your home’s purchase price annually for home maintenance and repair. A $400,000 home would require you to save $4,000 yearly or roughly $333 monthly.

Can You Buy a $400K Home With a Small Down Payment?

Yes, you can buy a $400K home with a small down payment.

Suppose you don’t qualify for a VA or USDA loan, does that mean you’re out of luck?

Not even close!

If you cannot procure a zero-down loan, you may still be able to obtain a mortgage with minimal down payment requirements.

But where? Here’s one suggestion…

Ally

Ally is an excellent choice for borrowers looking to secure a mortgage with minimal down. With the Ally Home program, mortgages can be obtained with down payments as low as 3%.

Ally doesn’t charge lender fees (i.e., no origination, application, underwriting, or processing fees). According to their website, you can be pre-approved in as little as three minutes.

Is a 400K Mortgage with No Down Payment a Good Idea?

Typically, the larger the down payment, the more favorable the interest rate. Therefore, it’s usually better to strive for a sizable down payment.

However, exceptions exist.

There can be scenarios where someone might have the capital for a large down payment but decides against this, forfeiting the reduced interest rate.

But why?

The individual may believe they can take that capital and invest somewhere that will earn a return higher than that which they’d lose due to the higher interest rate.

Regardless, this isn’t a problem for most of us. For most people, higher down payments are better, but that doesn’t mean no down payment is a bad idea.

If proceeding with no down payment today helps you secure a property before the real estate market rallies, it may be a better financial decision than waiting to save for a down payment only to pay a substantially higher property price in the future.

Can’t Afford a 400K Mortgage With No Down Payment?

If you’re looking to improve your chances of securing a 400k mortgage, there are several effective strategies you can begin employing immediately.

Supercharge Your Savings

We all know saving some of our income is imperative, but not all savings plans are created equal. Ensure you’re working with a reputable institution that offers favorable rates.

In your quest for a 400k mortgage, take advantage of every opportunity that will help you achieve your goal faster. Here are a few ways to start building up your savings:

Acorns

Fintech company Acorns is an excellent platform to consider using to help build your wealth through disciplined investing and saving.

Acorns allow you to save any spare dollars you earn without thinking twice. This makes it an ideal option for people saving for a down payment.

M1 Finance

M1 Finance is another exceptional platform offering digital checking accounts and a robo-advisory investment platform with brokerage accounts.

M1 is even offering a savings account with 5.00% APY at the moment. That’s a lot better than the average savings account APY…

Varo

M1 isn’t the only institution offering impressive yields. Varo is another platform where you can sign up and earn 5.00% APY on up to $5,000 and 3.00% APY on everything else.

With over 130,000 reviews with an average of 4.9 stars on the Apple App Store, Varo’s reputation speaks for itself.

Plus, here are some other great offers to check out…

Get Smart About Budgeting

If you’re serious about saving for a down payment, consider budgeting. Budgeting helps keep your spending focused and often highlights the misuse of money (curse your daily venti mocha cookie crumble frappuccino!).

Fortunately, there are now plenty of great personal budgeting solutions available. They take the hard work out of budgeting.

Our favorite tool remains Empower (formerly Personal Capital). You’ll be hard-pressed to find a cleaner, smoother user interface of any budgeting software. You’ll want to use it simply because it looks so good!

Pay Off Debt

Paying off debt will help you achieve your goal in two ways.

1. Responsible debt management is viewed favorably by lenders. It helps lower your credit score and improve your chance of securing a loan, like a mortgage.
2. Paying off debt sooner will help you pay less interest overall. Every dollar you save is a dollar you can use towards a down payment.

Look into First-Time Homebuyer Programs

Often, incentives are given to first-time homebuyers to encourage home ownership. If you’re a first-time homebuyer, inquire if your potential lender has any offers.

Build Up Your Credit

As we mentioned earlier, higher credit scores improve your chances of obtaining a mortgage. To this end, you should pursue activities that help improve it, which we detail in our article about how to buy a house with bad credit.

You should also consider leveraging a service like Chime’s Credit Builder Visa Card. Chime makes it exceedingly easy to improve your credit. The program caps the amount you can spend on your credit card based on your available balance in your Credit Builder-secured account.

Effortless credit building!

Final Word: 400K Mortgage With No Down Payment

Yes, it’s possible to obtain a 400k mortgage with no down payment — especially if you qualify for a VA or USDA loan.

Even if you don’t qualify for a zero-down payment mortgage, you may still be able to obtain a mortgage with low down payment requirements. It’s critical to shop around and explore the options you have at your disposal.

Moreover, just because you were denied a mortgage today doesn’t mean you can’t improve your chance of getting one in the future.

Work on expanding your savings, paying down debt, budgeting your finances, and improving your credit. Combined, these strategies can quickly help you achieve your homeownership goals.

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