How Much House Can I Afford on $400K a Year?

A $400,000 annual income puts you in a strong position to buy a serious home. But "how much house can I afford?" is rarely answered well by a simple rule of thumb — the real answer depends on your down payment, existing debt, property taxes in your target market, and what lenders will actually approve.

Here's how to think through it clearly, with current 2026 numbers throughout.

Start With the Math Lenders Use

Lenders don't look at your income in isolation. They look at two ratios:

Front-end DTI (housing ratio): Your total monthly housing costs divided by your gross monthly income. Most lenders prefer this stays at or below 28%.

Back-end DTI (total debt ratio): All monthly debt obligations — housing plus car loans, student loans, credit cards — divided by gross monthly income. The conventional sweet spot is 36% or below, with most lenders allowing up to 43–45% for well-qualified borrowers.

Check out our Affordability Calculator and get a

On $400,000 a year, your gross monthly income is $33,333. Here's what those thresholds mean in real dollars:

These are the ceilings — not targets. The right payment is one that leaves you financially comfortable, not just technically approved.

Translating That Into a Home Price

Let's apply these numbers to a real scenario at today's rate environment. As of late February 2026, the 30-year fixed mortgage rate averages approximately 6.0%.

Assume a 20% down payment and budget roughly $1,300/month for property taxes and homeowners insurance (reasonable for a $1M+ home in a mid-tax-rate state):

On $400K a year, a $1 million to $1.5 million home is well within reach at current rates — assuming a 20% down payment, minimal competing debt, and a conservative approach to your housing ratio.

What a $1M Home Actually Costs Monthly

Let's get specific. A $1 million home with 20% down ($200,000) leaves you with an $800,000 loan. At 6.0% on a 30-year fixed:

On $400,000/year, that $6,096 housing payment represents just 18.3% of your gross monthly income — comfortably below every standard threshold. You have meaningful financial headroom, even accounting for other debts.

That said, a $1M home in a high-tax state like New Jersey or Illinois could push your property tax line to $1,500–$2,000/month, meaningfully changing the picture. Location matters enormously.

How Other Debt Changes the Equation

DTI doesn't just measure your mortgage — it measures all your debt. A $400K income with zero other debt is a very different profile from one carrying a $1,500/month car lease, $800 in student loans, and a credit card minimum.

Here's how monthly back-end DTI stacks up against a $6,096 housing payment at different debt levels:

At $400K income, you have substantial room before hitting lender ceilings. But the real question isn't "what's the maximum?" — it's "what payment lets you still save, invest, and live without stress?"

Many financial advisors suggest keeping total housing costs at or below 25–28% of gross income as a practical comfort floor, not just a bank-qualifying threshold.

How Down Payment Affects Your Range

The 20% down scenario assumes $200,000 in cash available for a $1M purchase. That's a significant sum. Here's how different down payment levels shift your monthly payment on a $1M home at 6.0%:

Note: On a jumbo loan (which a $1M purchase almost certainly requires, given the 2026 conforming loan limit of $832,750), many lenders require at least 20% down regardless of PMI rules.

The Realistic Upper Limit

On $400K/year, a purchase in the $1.3M–$1.6M range is generally the realistic ceiling — assuming:

• 20% down payment

• Minimal other debt

• Moderate property taxes

• Approval for a jumbo loan (which typically requires 720+ credit score, strong reserves, and 12–24 months of mortgage payments in savings)

Going higher isn't impossible, but it begins to compromise savings rate, investment capacity, and financial resilience. Being approved for a payment and being comfortable with it are two different things.

The Bottom Line

On $400,000 a year, you can comfortably afford a $1 million home — and stretch toward $1.5 million with discipline. The math works at current rates. The real test is whether the payment fits your full financial picture: retirement contributions, education savings, lifestyle, and the not-insignificant cost of maintaining a home in that price range.

Run the real numbers — not just P&I — before setting your search range.

Use our Affordability Calculator to model your exact scenario with your income, debts, down payment, and current rates — and find out exactly what price range makes sense for your situation.

Sources

• Freddie Mac Primary Mortgage Market Survey, Feb. 26, 2026: 30-yr avg 5.98% — freddiemac.com/pmms

• Bankrate: DTI ratio guidance for mortgage qualification — bankrate.com

• FHFA 2026 Conforming Loan Limit: $832,750 — fhfa.gov

• Rocket Mortgage: Front-end and back-end DTI explanation — rocketmortgage.com

• All payment figures calculated using standard amortization formula