Can You Afford a $400,000 Home? Here’s What It Takes

If you’ve been browsing homes around the $400,000 price point and wondering whether it’s realistic, you’re not alone.

With median home prices hovering just above $400,000 in recent years, this price range reflects what many buyers are actually paying in today’s market. While that number may feel intimidating at first, homeownership at this level is still very achievable with the right plan.

Let’s break down what income you may need, what down payment options look like, and how to position yourself financially.

How Much Income Is Needed for a $400K Home?

Your required income depends on several factors, including your down payment, interest rate, and existing monthly debts.

Here’s an example scenario:

• Home price: $400,000

• Down payment: 20% ($80,000)

• Loan amount: $320,000

• Interest rate: 6.5% (30-year fixed)

• Existing monthly debt: $1,000

Under these assumptions, the estimated principal and interest payment would be approximately $2,348 per month (not including taxes and insurance).

When you add $1,000 in other monthly debt obligations, your total monthly debt would be about $3,348.

Most lenders look for a debt-to-income ratio (DTI) of 43% or lower. Using that guideline, you would need a gross monthly income of roughly $7,787 (about $93,000 annually) to qualify under these conditions.

What Is Debt-to-Income Ratio?

DTI compares your total monthly debt payments to your gross monthly income. It’s calculated by dividing your monthly debts by your income before taxes.

While 43% is a common benchmark, approvals depend on many variables, including:

• Credit score

• Property taxes

• Homeowners insurance

• Loan program guidelines

• Overall financial profile

The best way to determine what you personally qualify for is to speak with a mortgage professional who can run customized numbers.

Down Payment Options for a $400,000 Home

A 20% down payment is not your only option. There are multiple programs available depending on your financial situation.

Here’s what different down payments would look like:

20% Down — $80,000

• May eliminate private mortgage insurance (PMI)

• Often results in lower monthly payments

• Strongest overall loan positioning

15% Down — $60,000

• Lower upfront cash than 20%

• PMI typically required

10% Down — $40,000

• Moderate entry point

• Higher monthly payment than larger down payments

5% Down — $20,000

• Allows you to enter the market sooner

• PMI required

• Higher long-term costs

3% Down — $12,000

• Available through certain conventional and government-backed programs

• Lower upfront investment

• Higher payment and insurance costs

0% Down Options

Some loan programs offer zero down payment, typically for eligible borrowers (such as qualified veterans or specific rural property purchases). These programs come with additional eligibility requirements.

Lower down payments can make buying more accessible, but they often increase long-term borrowing costs. Reviewing the pros and cons with a lender helps ensure the strategy aligns with your goals.

How to Improve Your Ability to Afford a $400K Home

If you’re working toward this price range, here are practical steps you can take:

Build a Strong Down Payment

Saving 10–20% improves your approval odds and lowers monthly payments.

Strengthen Your Credit

Pay bills on time, reduce credit balances, and avoid opening new accounts before applying.

Review Your Budget

Evaluate income, recurring expenses, and financial priorities. Keep your DTI in a healthy range.

Get Pre-Approved

A mortgage pre-approval gives you clarity on your buying power and shows sellers you’re serious.

Plan for Total Home Costs

Remember to budget for:

• Property taxes

• Insurance

• Maintenance

• Utilities

Compare Lenders

Rates and loan structures vary. Shopping options can save thousands over time.

Be Strategic, Not Reactive

Avoid stretching beyond your comfort zone. Sustainable homeownership is the goal.

Already Own a $400K Home?

If you already own a home in this price range, you may have built meaningful equity.

Home equity can be accessed for:

• Renovations

• Debt consolidation

• Education expenses

• Investment properties

• Major life events

One common tool homeowners use is a Home Equity Line of Credit (HELOC). A HELOC allows you to borrow against your available equity during a draw period, paying interest only on what you use. After the draw period ends, you enter repayment of principal and interest.

Equity strategies should always align with your long-term financial plan.

Should You Apply Now?

Whether you’ve already found a home or are just starting your search, getting pre-approved is often the smartest first step.

Pre-approval:

• Clarifies your true price range

• Identifies potential obstacles early

• Strengthens your negotiating position

• Speeds up the buying process

Even if you’re still exploring, having accurate numbers gives you confidence and control.

The Bottom Line

A $400,000 home is attainable for many buyers — but affordability depends on preparation, strategy, and understanding your full financial picture.

The key isn’t guessing what you qualify for.
It’s running the numbers based on your specific goals.

If you’re ready to explore your options, consider starting with a mortgage pre-approval to see where you stand and what opportunities are available.