How Can I Earn Passive Income To Pay My Mortgage?

Our editor-in-chief 'makes cents' of creating passive income

Illustration of a house

The Balance/Alice Morgan

Dear Kristin,

Right now, I pay about $2,500 per month for my mortgage. My goal is to set up a “fund” to receive passive income that will return enough to cover my mortgage. How do I do that?



Dear John,

There’s a saying that millionaires have seven sources of income, and as you can imagine, that doesn’t mean they have seven jobs. So how do they manage to make that kind of money? The answer is through passive income.

There are a couple of ways you can create separate revenue streams to cover your monthly mortgage payment and anything else that you’d like. I actually chatted about this recently with Vivian Tu, a former Wall Street trader and founder of Your Rich BFF in an Instagram Live conversation (you can watch that conversation here). 

One way to earn passive income is through an income investing strategy of some sort. Similar to a retirement account, you could have an investment account where you could withdraw some of the funds each month or year to cover your mortgage (just remember, you may have to pay capital gains taxes on your earnings since withdrawing money from an investment account may mean selling assets).

You say you have a $2,500 monthly payment. That means your investment account needs to generate a minimum of $30,000 per year. The average stock market annual return is 10%, so your account would need to have $300,000 in it to make that $30,000 per year to cover your mortgage. Not only is that a lot of money, but when the stock market is in freefall (as it was in May 2022) and recession fears are on the rise, you might find it difficult to achieve that goal. 

But that doesn’t mean all types of investments are off the table. Many people generate passive income through real estate by owning rental properties. If you have the money to do so, you could purchase a home or building and use the money generated from rent to pay the mortgage on that property and your primary home. Of course, this isn’t guaranteed, and you should do this with caution. Plenty of people have bought properties thinking they could rent them on a platform like Airbnb and found they didn’t earn enough to cover the mortgage, which put them in trouble financially. 

Other ways to generate income to cover your mortgage are through side hustles or royalties. This helps you diversify your income. People who write a book or song, or create another piece of content that is then sold, often receive paychecks for it for the rest of their lives. Advertisers also pay money to be featured on websites or videos, and a lot of entrepreneurs have found they can make money like this. While not necessarily passive, a side hustle could generate enough money that would cover your mortgage and other expenses. This could be a type of small business, blog or vlog, or another type of side job. This additional income may allow you to free up funds from your primary job so that you can invest and create even more wealth.

Ultimately, there are many ways to make more money, and you just need to find one that is the best fit for you and your goals. I’ve only mentioned a few here but there are several more that might work for you! No matter what you choose, don’t be discouraged if the passive income can’t pay off your entire mortgage right away. Even if it only chips away at a portion, you could invest or use the additional income to bolster your savings, investment, or retirement accounts and set yourself up for financial success in other ways.

Good luck!


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Vanguard. "Realized Capital Gains."

  2. U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy. “Saving and Investing.”

  3. Yahoo Finance. "S&P 500 (^GSPC)."

  4. “Rental or Royalty Income.”

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