How Much Income Is Needed for a $550,000 Mortgage?

By Alene Laney · June 07, 2024 · 12 minute read

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How Much Income Is Needed for a $550,000 Mortgage?

If you’re looking at a $550,000 mortgage, you’ll need some solid numbers to help you afford the home you want. Assuming a 7% interest rate, you’ll need to make around $160,000 per year to afford the roughly $4,800 monthly payment on this loan.

This amount includes an estimate for taxes and insurance by Fannie Mae and a 36% total debt ratio. This number also assumes a higher purchase price of $687,500 with a 20% down payment to get the $550,000 mortgage with no private mortgage insurance (PMI).

We’ll run through a few scenarios to help you understand how different factors affect how much you’ll need to make to meet the requirements for this mortgage. As with any advice, it’s best to talk to a good lender, who can help you along the path of home affordability.

Income Needed for a $550,000 Mortgage

It requires a significant amount of income to pay for housing costs around the country. According to the most recent data from the U.S. Census Bureau obtained from the Federal Reserve Bank of St. Louis, the national median housing price is $420,800 in the first quarter of 2024. If you have no debt, you’ll need to make around $130,000 for the average house.

For a $550,000 mortgage loan, the amount needed is around $160,000. We arrived at this number by calculating the monthly payment on a $550,000 mortgage with a 7% APR, assuming at least a 20% down payment was already made on the purchase price to eliminate the cost of mortgage insurance. This number is just for the mortgage with taxes and insurance and assumes you have no other debt.

But if you’re a normal human being, you probably have a little debt and need to account for that in determining how much money is required to afford your $550,000 mortgage and your debt obligations. Here’s how to do that.

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 $550K Mortgage?

You need to make a reliable annual income of $160,000 to $200,000 (give or take, depending on your debt level) to get a $550,000 mortgage. A few years ago, it was possible to get a $550,000 loan on a smaller income. Now, given that interest rates have risen, you need to lower your debt, increase your income and savings, and be a salary superstar to afford a $550,000 home.

What Is a Good Debt-to-Income Ratio?

A good debt-to-income ratio is as low as you can get it. Lenders favor levels below 36%, but you may be able to find a lender that allows for a debt-to-income (DTI) ratio around 45%.

What Determines How Much House You Can Afford?

How much house you can afford is determined by a number of factors. To give you a general idea of how they work together, consider the following:


How much you make is the biggest factor in determining how much you can afford. But it’s also the predictability of the income that’s important to a lender. If you’re in business for yourself, but don’t have two years worth of tax returns, it’s hard to prove income, and the lender is less likely to want to lend you money.


Your debt obligations take away from how much home you can afford. More debt = less money available for a house payment = lower mortgage amount.

Down Payment

If you have a larger down payment, you’ll be able to afford more house. A down payment of 20% is ideal because you can avoid a PMI payment (mortgage insurance for the lender that does nothing for you). However, if you have good credit and a good lender, you may be able to find a loan type that doesn’t require 20% down and still get a good rate. Use a mortgage calculator to see how a down payment affects your home affordability.

Loan Type

The different types of mortgage loans affect how much house you can afford, since your monthly payment will vary. For example, a 15-year mortgage will have a higher monthly payment, which means you’ll have to choose a lower-priced home. You’ll also see your home affordability change when choosing between fixed-rate and adjustable-rate, especially if you compare 5-year ARMs vs. 30-year fixed mortgages.

If you need a loan that exceeds the conforming loan limits for your area, you’re looking at a jumbo loan, which has different requirements (such as a higher credit score and down payment) that will affect home affordability.

Lender and Interest Rate

Even the lender you choose can affect home affordability. This is because lenders offer different rates and have different risk tolerances. For example, if you have a lender that’s willing to underwrite loans with a 45% DTI ratio, you’ll qualify for a larger mortgage than you would with a lender that’s only willing to accept a 36% DTI ratio. That’s one of the many reasons it’s important to shop around for a loan and a lender.

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What Mortgage Lenders Look For

For a $550,000 mortgage, lenders will look at the following factors in making a lending decision about you.

•   Credit score: Your credit score evaluates how risky your behavior with credit is. The higher, the better. If you make your payments on time, every time, you’ll be well on your way to a great credit score.

•   Debt-to-income ratio: Debt has to be factored into the equation. Lenders want to know that you can meet your monthly obligations. If you have lower amounts of debt, you’ll likely be approved for a larger mortgage amount because you can afford the monthly payment.

•   Income: You need to make enough steady income to qualify for the loan.

•   Down payment: A higher down payment reduces the risk to the lender. They may be able to offer better rates and terms to you if you have a significant down payment. However, even if you have a lower down payment amount, you may still qualify for great terms and rates with a lender.

$550,000 Mortgage Breakdown Examples

Everyone’s financial situation is so different. Perhaps one of these examples with different down payments, debt levels, and interest rates can help you see where you may fall. These numbers were taken from Fannie Mae’s mortgage calculator and include an estimate for taxes and insurance.

$550,000, 30-year mortgage with 20% down payment and 7% interest

•   Principal and interest: $3,513

•   Taxes and insurance: $1,100

•   Total monthly payment: $4,613

$550,000, 30-year mortgage with zero down payment, and PMI, at 7% interest

•   Principal and interest: $3,659

•   Taxes and insurance: $917

•   Mortgage insurance: $504

•   Total monthly payment: $5,080

$550,000, 15-year mortgage with 20% down, at 6.5% interest

•   Principal and interest: $4,599

•   Taxes and insurance: $1,100

•   Total monthly payment: $5,699

Pros and Cons of a $550,000 Mortgage

A $550,000 mortgage has some pros and cons you’ll want to consider.


•   Helps you buy the home you want

•   Falls under the conforming loan limit so you can qualify for a conventional loan

•   You may be able to put down a low down payment amount

•   Allows you to become a homeowner


•   You may pay a lot in interest costs

•   High monthly payment

•   Taxes, insurance, mortgage insurance, and other costs will be higher

•   More expensive to maintain a $550,000 home

How Much Will You Need for a Down Payment?

Here’s what you’ll need for a down payment for a roughly $550,000 mortgage on a home costing $567,000.

Loan type

Minimum down payment

Amount for a $550,000 loan

Conventional 3% (first-time homebuyers) $17,010
Federal Housing Administration (FHA) 3.5% $19,845
U.S. Department of Veterans Affairs (VA) 0% 0%
U. S. Department of Agriculture (USDA) 0% 0%

Keep in mind, if you’re able to put down 20% ($110,000), you won’t need to include PMI in your monthly mortgage calculation, which will help you afford more home.

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Can You Buy a $550K Home With No Money Down?

It is possible to buy a $550,000 home with no money down, especially if you’re able to take advantage of one of the following loan types. These options have 0% down payment requirements for borrowers who qualify.

0% Down Payment Mortgages

•   VA mortgages For qualified veterans and servicemembers, VA mortgages offer excellent rates along with no down payment requirement. Veterans must obtain a certificate of eligibility (COE), which is based on service and duty status.

•   USDA mortgages If you live in a rural area and make a moderate income, you’ll want to look at a USDA mortgage. This type of mortgage doesn’t require a down payment and the interest rate is similar to what you would get with a conventional loan. There are even some options where USDA directly services the loan and provides payment assistance to make it more affordable for the borrower.

Can You Buy a $550K Home With a Small Down Payment?

If you’re looking to keep as much cash in your hands as possible, you might be wondering if you can buy a home with a small down payment. The answer is yes, it is possible to buy a $550,000 home with a small down payment.

•   Conventional mortgages Since a $550,000 mortgage falls under the conforming loan limits, you can qualify for conventional financing, which first-time homebuyers can obtain for as little as 3% down. You will need to pay mortgage insurance (PMI), but if you can afford the monthly payment and it allows you to get into a home, it may be worth it to you.

•   FHA mortgages It’s possible to get an FHA mortgage with as little as 3.5% of the purchase price. You also need to pay mortgage insurance on an FHA loan, and it’s expensive. You’ll want to refinance your mortgage as soon as you’re able just to get rid of it.

The other options for 0% down payment mortgages mentioned previously, VA loans and USDA loans, are also available here.

Is a $550K Mortgage with No Down Payment a Good Idea?

If you desire to move into a home of your own and can afford the higher monthly payment on a $550,000 mortgage with no down payment, don’t let anything hold you back. A 20% down payment is a great idea, but it can be incredibly hard in reality, even in the most affordable states. If you’re in a strong financial position, but don’t have a down payment, talk to a lender to see if you can make it work.

Can’t Afford a $550K Mortgage With No Down Payment?

There are things you can do if you can’t afford a $550,000 mortgage. Take a look at our tips to help you qualify for a mortgage. You can also try the following:

Pay Off Debt

When you pay off debt, you get that much more in your budget to be able to afford a home. Take a look at our home affordability mortgage calculator. You’ll be surprised how much paying off debt can affect your home affordability.

Look into First-Time Homebuyer Programs

Look for first-time homebuyer programs in your area. They’re different from state to state and city to city, but in general, most areas have a program that can help with down payment and closing costs assistance, homebuyer education, and rate buydowns.

Care for Your Credit Score

There are some strategic moves you can make to build your credit history. Try one of these ideas.

•   Check your credit report. You’ll want to know what is in your report and what your score is. You can fix errors, pay off balances, or find out what negative items are impacting your score.

•   Consider opening a credit account. If you’re new to credit, you may need a credit account to build your credit history. Look for secured or student credit cards with low limits. Use it for a few purchases and pay the balance in full every month.

•   Automate your payments. If you’re not using autopay or your bank’s bill pay, get it set up. It’s an easy and stress-free way to build your credit history, which is what most of your credit score consists of.

Start Budgeting

Even if you know what you’re doing when it comes to managing your money, going back to the basics of budgeting can help tremendously. You’ll get laser-focused on the areas you can adjust so you can save money and meet your goals.

Alternatives to Conventional Mortgage Loans

Conventional mortgages aren’t the only ways to finance a home. If you’re looking for nontraditional funding sources, you’ll want to look here:

•   Private lending: A private lender isn’t associated with a bank and offers their own terms and conditions (usually a higher interest rate and a shorter term). Qualifications may also be more flexible.

•   Seller financing: Seller financing is another alternative where the seller acts as the lender. In an arrangement like this, the seller and buyer agree on the details, such as purchase price and payments.

•   Rent-to-own: Similar to seller financing, rent-to-own arrangements are made where the buyer agrees to lease the property before they’re able to buy it.

Mortgage Tips

If you want a great mortgage, you’ll need to do a little homework. A home loan help center is a good place to start, but here are some sample tips:

•   Shop around. Interest rates and terms vary by lender.

•   Compare loan estimates. A loan estimate is a standard form where the lender estimates the fees, interest rates, closing costs, and other terms of the loan you want. By submitting the same information to each lender, you can get a good idea of what each loan would cost during the mortgage preapproval process.

•   Choose a lender who communicates well. A lender who can communicate effectively with you will make the process go much smoother. Ask for recommendations from friends and family and interview prospective lenders.

The Takeaway

To get a $550,000 mortgage, you’ll need enough income, an appropriate DTI ratio, and strong credit. Low- and zero-down-payment mortgages can help you qualify for a mortgage of this size faster, but they do come with a large PMI payment added to your monthly mortgage payment.

If you make it a goal to be able to qualify for a $550,000 mortgage, you’ll need to make the right moves to get there. It won’t be easy, but it will be worth it.

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 does a $550,000 mortgage cost over 10 years?

If you borrow $550,000 at a 7% interest rate, you can expect to pay out a total of $766,316 over the decade of payments.

Can I afford a $500K house on a $100K salary?

If your interest rate is good enough, you have a big enough down payment, and you have little or no debt, a $100,000 salary may just be enough to afford a $500,000 house in the eyes of some lenders.

Photo credit: iStock/Pekic

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.


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