I plan make a free game with free software do I need to still pay the 500k with no budget?
No,
You can see the license page at https://www.fmod.com/licensing
it says if your budget is $500k or less (what you spent making the game), the ‘fee’ is 0.
If you’re not even selling your game, or earning any money at all for it (ie no sales, no advertising, no freemium, no donations), then you dont need any sort of license, this is covered by the EULA. https://www.fmod.com/legal