What Salary Do You Need to Afford a $400K Home? The Real Numbers for 2026

Let's cut through the noise and look at the hard numbers for buying a $400,000 home today. The baseline calculation is straightforward: you need a salary that can handle the monthly payment. Using a standard 30-year fixed mortgage at a high 6.88 percent interest rate and a 20% down payment, the math shows a clear threshold. To afford this purchase, you must earn a minimum of $105,864 per year. That translates directly to a monthly mortgage payment of about $2,470.

This figure is grounded in a foundational guideline known as the 28/36 rule. This rule of thumb says your housing costs should not exceed 28% of your gross monthly income, while all your debt payments-including the mortgage-should stay under 36%. Let's check the math. The required annual income of $105,864 breaks down to roughly $8,822 per month. Applying the 28% rule, the maximum you should spend on housing is about $2,470. That's a perfect match. It confirms that $105,864 is the bare minimum income needed to keep your housing payment within that safe, recommended limit.

The bottom line is that your credit score and down payment size are the two biggest levers that can change this number. A higher credit score typically gets you a lower interest rate, which directly reduces your monthly payment. In fact, a 100-point credit score difference can change your monthly payment by $150-$200. Similarly, a larger down payment shrinks the loan amount and often improves your rate, further lowering the required income. The 20% down payment assumption in this baseline calculation is key; putting down less would push the required salary even higher.

The Real-World Variables: Down Payment, Fees, and Your Budget

The headline income number is just the starting point. The real test is whether you can actually close the deal and live comfortably afterward. Let's kick the tires on the practical hurdles.

First, you don't need a 20% down payment to buy a home. In fact, many first-time buyers are using low-down-payment loans or assistance programs. The baseline calculation assumed 20% to avoid private mortgage insurance (PMI), but options like conventional loans at 3% down or FHA loans at 3.5% are common. The catch? A smaller down payment means a larger loan, which directly increases your monthly payment. It's a trade-off between buying sooner and paying more each month.

Then there's the total cash you need at closing. This is more than just the down payment. It includes closing costs, lender fees, title insurance, prepaids for taxes and insurance, and inspection fees. Planning for this full "cash-to-close" amount is critical. A buyer might save 3% for a down payment but still need another 2-3% in cash to cover these other costs. That's why a smart strategy is to put down enough to qualify comfortably while keeping a healthy cushion in savings for moving, repairs, and emergencies.

Lenders also apply a stricter rule than the 28% housing guideline: the debt-to-income (DTI) ratio. They typically cap total monthly debt payments-including your mortgage, car loans, and credit cards-at 36% of your gross monthly income. This can be a tighter limit than the 28% housing rule alone. For example, if you have significant student loan debt, that 36% cap might force you to choose a less expensive home or a lower loan amount than your housing budget would allow.

Finally, your credit score is a powerful lever. A 100-point credit score difference can change your monthly payment by $150-$200. That's a tangible impact on affordability. A higher score gets you a lower interest rate, which reduces your payment and can help you qualify for a larger loan or a lower down payment.

The bottom line is that affordability is a balancing act. You need to consider the full cash-to-close, your total debt load, and your credit profile-not just the headline income number. The goal is to find a home that fits your budget, not just your lender's approval.

Market Context: Affordability Trends and What to Watch

The numbers for a $400,000 home don't exist in a vacuum. They reflect a market where affordability is a persistent challenge, even as some conditions show signs of easing.

First, the good news on rates. After a long stretch near 7%, mortgage rates have stabilized around the 6% mark. The average 30-year fixed rate dipped below 6% earlier this week, closing at 5.999%, though it remains near the 6% level. This slight dip, combined with solid economic growth, has sparked a rebound in purchase demand, which is now up over 20% from a year ago. That's a positive signal for market activity.

Yet, the story for would-be buyers is still a mixed one. The most telling data point is the state of first-time buyer activity. Despite the improving demand, their share of the market hit a record low of 21% last year. That's a stark drop from the historical norm of about 40%. This isn't just a statistic; it's a direct measure of how tough it is for newcomers to get a foothold. The high cost of entry-both in price and required income-keeps them sidelined.

Zooming out, it's also important to note that a $400,000 home is not an average purchase. The national median price sits at $363,000. That means buying a $400,000 property is a premium move, requiring a salary that is well above the national median. The affordability calculation we've done is for a home that is already a step up from the typical starter house.

The bottom line is that the market is in a tug-of-war. On one side, lower rates and rising demand suggest a more welcoming environment. On the other, the record-low share of first-time buyers shows that for many, the dream of a $400,000 home remains out of reach. The path to affordability will depend on whether rates can hold steady or dip further, and whether first-time buyer support programs can help bridge the gap.

Kick the Tires: Applying the Numbers to Your Life

The math is clear, but the real test is whether this fits your life. Don't just accept a lender's approval number. Use the 28/36 rule as your personal compass to find your comfort zone. Start by calculating 28% of your gross monthly income for housing and 36% for all your debt payments. That's your budget floor. If your dream home pushes you over either threshold, it's time to adjust your sights or your strategy.

The next step is to negotiate your way to a better deal. Your credit score is a powerful lever. A 100-point difference can change your monthly payment by $150-$200. Before you shop, pull your credit reports, dispute errors, and pay down balances. This simple move can lower your rate and your payment. Then, shop with multiple lenders. Rates and fees vary, and competition can work in your favor. Also, consider your down payment. While you don't need 20% to buy, a larger one often gets you a better rate and can help you avoid private mortgage insurance. The goal is to find the sweet spot where your monthly payment fits your budget and leaves room for the unexpected.

This is where the "house poor" trap is avoided. Your total monthly housing costs-mortgage, taxes, insurance, and HOA-should leave you with enough cash flow for savings, emergencies, and other living expenses. If you're scraping by after the mortgage, you're not truly in control. Keep it simple: if the numbers don't leave you breathing room, they're not right.

Here are your actionable next steps. First-time buyers, explore down payment assistance programs. These can be a game-changer, turning a dream into a reality. Use the Down Payment Assistance Search Tool to find local options. If you're using gift funds, document them properly with a signed letter to avoid lender delays. And for everyone, get pre-approved. It's not just a formality; it gives you a clear, realistic number to work with and shows sellers you're serious. The bottom line is to build your budget around your life, not the other way around.