To qualify for a $400,000 mortgage, one must earn approximately how much per year?

To determine the income needed to qualify for a $400,000 mortgage, it's essential to consider common lending guidelines that banks and mortgage lenders use. Typically, lenders look for a debt-to-income (DTI) ratio of about 28% to 36%. This ratio considers your monthly housing cost, including principal, interest, taxes, and insurance, and compares it to your gross monthly income.

For a $400,000 mortgage, assuming an average interest rate and a typical loan term, the monthly payment (including principal and interest) would likely fall within a certain range. When estimating total housing costs, which also includes property taxes and home insurance, you might find the monthly payment approximates several thousands of dollars.

If we take a common scenario where the monthly mortgage payment amounts to around $2,400, then to maintain a manageable DTI, you would look for an annual gross income that allows this payment to form a reasonable percentage of your income. Using the 28% guideline, an approximate calculation would suggest an annual income of around $160,000 to comfortably cover that mortgage payment.

Choosing the option that suggests $160,000 aligns well with this analysis, making it a plausible estimate for qualifying for the mortgage in question. Thus, that