How Much Income Is Needed for a $175,000 Mortgage?

By Jamie Cattanach · June 14, 2024 · 10 minute read

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How Much Income Is Needed for a $175,000 Mortgage?

Homeownership continues to be a key part of the American dream. But exactly how much money do you need to make if living the dream means taking on a $175,000 mortgage? While the specific income figures required vary depending on other financial factors, a $175,000 mortgage will likely require an income in the neighborhood of $60,000.

There are several rules of thumb you can follow to get an estimate of how much mortgage you can afford. Let’s take a closer look.

Income Needed for a $175,000 Mortgage

Unfortunately there is not a simple answer to the question of how much income you need to qualify for a mortgage. That’s because mortgage qualification involves a complex calculation that factors in other finance figures like your debt-to-income (DTI) ratio, how much money you have for a down payment, your credit score, and even your location.

However, there are generally accepted formulas that can help us get a ballpark income estimate, all other things being equal.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

How Much Do You Need to Make to Get a $175K Mortgage?

That formula we were talking about states your housing payment should be about 30% of your gross income — that is, the amount you earn each month before taking out taxes and deductions. From here, we can do some reverse engineering. Using an online mortgage calculator, you can estimate the monthly payment on a $175,000 mortgage. (Along with the property’s total value and your projected down payment, you’ll also need to put in an estimated interest rate. Keep in mind that the rate you qualify for will depend on your credit score, and that baseline interest rates change regularly as the market fluctuates.)

Say you’re buying a $200,000 house with a $25,000 down payment, leading to your $175,000 mortgage. At an estimated 7% interest rate, your monthly mortgage loan payment would be around $1,170. When you add taxes, insurance, and private mortgage insurance (PMI), your total monthly payment will be around $1,600. For simplicity’s sake, we can multiply that total by three to find out an approximate minimum monthly gross income at which such a mortgage is affordable. When we do, we get $4,800, or about $58,000 in annual income.

Still, keep in mind that a home affordability calculator can provide only an estimate. Many other factors play into your actual monthly mortgage payment, including property taxes in your area, and your DTI ratio.

This last piece is a big enough deal in the world of home-lending that it’s worth taking some time to explore, so let’s do that now.

What Is a Good Debt-to-Income Ratio?

Your debt-to-income (DTI) ratio is the amount of debt you owe each month versus your available income. It’s calculated by dividing your monthly debt payments by your gross monthly income. For instance, if you earn $3,500 per month and pay $500 toward your car payment and $350 toward student loans, your DTI ratio would be calculated like so:

(500+350)/3,500 = 0.24, or a DTI of 24%

While each lender has its own specific qualifying criteria, generally speaking, a lower DTI is better. Most lenders will begin to disapprove applicants whose DTI hits 36% or so, though you may be able to get approved with a DTI of up to 50% in some cases. (Still, even if you can get approved, a higher DTI ratio likely means your housing payment will be more difficult to make each month.)

What Determines How Much House You Can Afford?

As we’ve seen already, there are lots of different factors that determine how much house you can afford. A few of those include:

•   Your income

•   Your DTI ratio

•   Your credit score

•   Your down payment

•   The cost of living in your location

What Mortgage Lenders Look For

While, again, each specific mortgage lender has its own qualifying criteria (and these may also shift depending on what kind of mortgage you’re applying for), some of the primary factors lenders look as an applicant goes through the mortgage preapproval process include:

•   Reliable and sufficient income

•   Favorable credit history and credit score

•   Sufficient existing assets, such as cash and investments

•   Reasonable levels of existing debt (DTI ratio)

$175,000 Mortgage Breakdown Examples

A little-understood characteristic of mortgages: Although each monthly payment is identical (in the case of a fixed-rate mortgage, at least), the proportional amount of each payment that goes toward interest varies over the life of the loan. Toward the beginning of your loan, the bulk of your monthly payment is going toward interest rather than principal, which helps ensure the lender gets paid for its services. This breakdown is known as the amortization of the loan, and it’s well worth looking up ahead of time so you understand exactly how much of your money is going where.

Looking up the amortization schedule ahead of time can also reveal how much you’ll pay in interest over the entire lifetime of the loan, which depends on your interest rate and loan term. Here are two examples of how the same $175,000 loan breaks down differently depending on these factors:

10-year fixed rate loan at 7.00%
Monthly payment: $2,032
Total paid over the life of the loan: $243,828
Total interest paid: $68,828

30-year fixed rate loan at 7.00%
Monthly payment: $1,164
Total paid over the life of the loan: $419,140
Total interest paid: $244,140

Pros and Cons of a $175,000 Mortgage

Like any decision in life, financial or otherwise, there are both drawbacks and benefits to consider when you’re contemplating taking out a $175,000 mortgage. Here are a few of them at a glance:


•   A $175,000 mortgage is substantially lower than the median sale price of homes in the United States as per the first quarter of 2024 ($420,800).

•   Although there’s no guarantee, homes do tend to appreciate over time, which means the debt may be worth it in the long run, even with interest.

•   Owning your own home offers stability and can help build generational wealth.

•   The interest on your housing payment may be tax deductible.

•   If you pay your mortgage on time each month, your credit score may improve.


•   Interest means you’ll likely pay far more than the home is worth today over the lifetime of the loan.

•   If you fall behind on your mortgage payments, you’re at risk of having your home go into foreclosure.

•   As a homeowner, you’ll be responsible for any and all maintenance and repairs your home requires.

•   Along with your mortgage, you’ll also need to pay property taxes, homeowners insurance, and other related costs.

How Much Will You Need for a Down Payment?

While a well-known rule of thumb states that homebuyers should save up a 20% down payment before they make a purchase, these days you can put down far less than that. For example, many conventional mortgages allow first-time borrowers to put down as little as 3%, which, for a $200,000 home purchase, adds up to $6,000. (A 20% down payment would be $40,000.)

However, keep in mind that a lower down payment means you’ll likely need to pay for PMI. This cost can add a few hundred dollars to your monthly payment, which can make it harder for some borrowers to make ends meet each month.

Is a $175K Mortgage With No Down Payment a Good Idea?

There are some programs, such as VA loans (from the U.S. Department of Veterans Affairs), that allow borrowers to take out a mortgage with no down payment at all. However, even if you qualify for such a loan, it’s important to consider its potential drawbacks before you agree.

Because a low- or no-down-payment mortgage may be seen as a riskier prospect to the lender, it may come at a higher interest rate — which could drive up how much you pay in total over the lifetime of the loan. It also means you’ll start out your homeownership journey with no equity in your house, meaning the value of your share of the ownership will build more slowly over time.

Still, these programs can help some borrowers buy a house far sooner than they might otherwise be able to, while keeping some funds freed up for other costs (including potential home maintenance and repair). In short, only you can decide if a no-down-payment mortgage is a good move for you, but be sure you’re making the decision with knowledge on your side.

Can’t Afford a $175K Mortgage With No Down Payment?

If you’re having trouble qualifying for a $175,000 mortgage, even without a down payment, there are some steps you can take to help get your ducks in a row — and make your homeownership dreams possible in the not-too-distant future.

Pay Off Debt

Given how important DTI is when it comes to qualifying mortgage applicants, paying off existing debt can be a huge boon toward getting your application approved — and it’ll also make paying your monthly mortgage a lot easier.

Look Into First-Time Homebuyer Programs

There are many first-time homebuyer programs out there that are specifically designed to help people whose financial histories may be a little shorter or spottier. For instance, depending on your income, your local government may offer low-cost down payment assistance loans, and you can also look into an FHA mortgage, which is backed by the Federal Housing Administration and can help those with lower credit scores get qualified.

Build Up Credit

While it’s possible to qualify for a home loan with a lower credit score, if you build it up, it’s a whole lot easier — and you’ll likely get a better interest rate, which will lower your overall costs. Some reliable ways to build your credit include making on-time payments and lowering your overall revolving balance.

Start Budgeting

Budgeting is the best way to meet just about any financial goal — because when you do, you’ve got a blueprint for where your money is going. If you’ve yet to create a budget, do so, and look for areas where you might be able to make cuts that could go toward your new-home savings fund.

Alternatives to Conventional Mortgage Loans

While conventional mortgages are available from many different lenders, they’re not the only ones on the market — or necessarily the best for all borrowers. You may also qualify for different types of mortgage loans, such as:

•   FHA loans, which are designed specifically for first-time home buyers

•   VA loans, which are for service members, veterans, and qualifying surviving family members

•   U.S. Department of Agriculture loans, which help households under certain income thresholds purchase homes in eligible rural areas

Mortgage Tips

No matter which mortgage program you go with, the best tip is to shop around. Different lenders may be able to qualify you for different rates, and as we’ve seen above, interest can really add up. Even a fraction of a percentage difference could translate to thousands of dollars over a 30-year loan! Remember that if you can’t qualify for the lowest rate initially, you may find that you can do a mortgage refinance in the future.

The Takeaway

As we’ve seen, there’s no one simple answer to the question, “How much money do I need to make to take out a $175,000 mortgage?” Rather, the mortgage qualification process is a more complex and holistic process that involves your debt level, income, credit history, and many other factors. However, with the many different programs available for first-time homebuyers, there’s a good chance you may be able to find a way to qualify.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.


How much mortgage can I afford with a $175,000 income?

If you’re earning $175,000 per year, that’s about $14,500 per month. Your housing payment should be no more than 30% of your monthly gross income — which calculates to $4,350 per month. With an income like this, you can probably afford a mortgage around $550,000 depending on your other debts and how much you have available for a down payment.

How much is a $175,000 mortgage per month?

Your exact mortgage payment will depend on many factors, including your interest rate. Borrow $175,000 with a 7% interest rate and a 30-year term, and the monthly payment will be around $1,164, excluding taxes and insurance.

Is $2,000 a lot for a mortgage?

Whether $2,000 per month is a lot to pay on a mortgage depends on how much you’re earning and how much of a squeeze you feel when you make that monthly payment. Most people would need to be earning about $6,000 per month or $72,000 per year — with little to no other debts — for a $2,000 mortgage payment to feel comfortable.

Photo credit: iStock/FG Trade

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