Your monthly mortgage payment will be made up of four parts: principal, interest, taxes and insurance (PITI). For purposes of our calculations, we’ll be focusing on principal and interest, but keep this in mind: The total amount you’ll pay in principal and interest each month can vary significantly depending on your interest rate and the length of your loan term. It’s time now to delve into how both of these factors, along with other factors, impact a $400,000 mortgage payment.
How Term Length Impacts A $400K Mortgage
Simply put, the shorter your mortgage term length, the higher your mortgage payment will be each month. That’s because you’ll have less time to pay off the total principal balance and you’ll have to do so in significantly fewer payments. For example, on a $400K mortgage with a 7% fixed rate, the monthly payment on a 15-year loan is $3,595. The payment on a 30-year loan, by comparison, is $2,661. Just keep in mind that neither amount factors in the cost of insurance or property taxes, which will both be included in your monthly payment.
Consider, too, that although you’ll pay more each month with a 15-year mortgage than you’d pay monthly with a 30-year mortgage, you’re likely to have a lower interest rate on the 15-year plan since rates tend to be lower on shorter-term mortgages. For example, with all other factors being equal, the interest rate on a 30-year $400,000 loan might be 7.9%, while the rate on a 15-year loan for the same amount might be 6.9%.
How Interest Rate Impacts A $400K Mortgage
As already noted, another factor that will impact your monthly mortgage payment on a $400K loan is the interest rate you qualify for. The higher the interest rate, the higher your monthly payment. Sticking with the example in the section above, a 30-year $400K mortgage at a 7% interest rate would have a monthly payment of $2,661. Meanwhile, the same 30-year $400K mortgage at a 7.5% interest rate would have a monthly payment of $2,797, taxes and insurance not included.
Adjustable-Rate Mortgages
While the aforementioned examples use a fixed-rate mortgage for simplicity, it’s possible that you could choose an adjustable-rate mortgage. With this option, home buyers have an introductory rate for an agreed-upon time period after which their interest rate can go up, down or both, depending on how the market fluctuates over time.
What Determines Your Mortgage Rate?
Your interest rate is determined not only by your term length, but by other factors that include market interest rates, your credit score, your loan-to-value ratio, your down payment and the loan program of your choosing. Your interest rate will also be affected by your individual lender, so be sure to compare rate quotes from different lenders to see who’ll provide you with your best option.
Additional Costs To Consider
As mentioned, in addition to the principal and interest associated with your mortgage, you’ll have to factor some other costs into your monthly mortgage payment. Specifically, many lenders require that you pay into an escrow account every month to cover the cost of homeowners insurance and property taxes. And, if you’re taking out a conventional loan but putting down less than 20%, you’ll need to pay private mortgage insurance – leading to an even higher monthly payment.
If you live in a home connected to a homeowners association (HOA), you’ll also have to pay monthly or yearly HOA dues for various amenities that the HOA provides to residents of the neighborhood. Like interest rate, loan term, insurance costs and property taxes, HOA dues can affect the affordability of a $400K mortgage.
FAQs
Monthly payments for a $400,000 mortgage
| Annual Percentage Rate (APR) | Monthly payment (15 year) | Monthly payment (30 year) |
|---|
| 6.25% | $3,429.69 | $2,4625.87 |
| 6.50% | $3,484.43 | $2,528.27 |
| 6.75% | $3,539.64 | $2,594.39 |
| 7.00% | $3,595.31 | $2,661.21 |
3 more rowsTo afford a $400,000 home, assuming a 20% down payment and a 6.5% interest rate on a 30-year mortgage, you would need a gross monthly income of approximately $7,786.55. This assumes you have $1,000 in monthly debt.
How much money do you need saved to buy a $400K house? ›
Your minimum down payment for a $400K house with a pure conventional loan can be $80,000. However, read about piggyback loans, which may get you many of the advantages of a 20% down payment if you've only saved 10%.
Can I afford a 400K house on 100k salary? ›
Assuming you have a 5% down payment (which is what would be required for an FHA loan) and less than 6% in other debts per month (~$500) you could afford a $400,000 home on a $100,000 salary. This number could change substantially, however, depending on if you have a bigger down payment or less debt.
How much is a $400,000 mortgage for 30 years? ›
As of January 9, 2024, the national average mortgage rate for a 30-year fixed-rate mortgage is 7.06%. With these terms, if you bought a $400,000 house and put 20% down, your monthly mortgage payment would be $2,141. With these numbers, though, your total interest payment would be $451,844 throughout the loan.
How much is a 30-year mortgage on $400,000? ›
Monthly payments on a $400,000 mortgage
At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $2,661 a month, while a 15-year might cost $3,595 a month.
What house can I afford on 70K a year? ›
If you make $70K a year, you can likely afford a new home between $290,000 and $310,000*. That translates to a monthly house payment between $2,000 and $2,500, which includes your monthly mortgage payment, taxes, and home insurance.
How much should I make to afford a 350k house? ›
Following the 28/36 rule, a guideline many mortgage lenders use to gauge how much you can afford, you'd likely need to earn at least $90,000 per year to afford a $350,000 house without spreading yourself too thin. Keep in mind that figure does not include upfront payments, like your down payment and closing costs.
Is 400k a lot of money? ›
A recent essay by Ross Douthat, Stephens and Collins's colleague at the Times, offers one answer: These people are rich by any measure, and they are spending their money on things only rich people can afford, such as living in the best school districts and in or near amenity-rich megacities.
Can I afford a 400k house with $70 K salary? ›
How much income you need to buy a house in a specific price range largely depends on the type of loan you're applying for, where you live and other factors. For example, at current mortgage rates, borrowers with an FHA loan and a 10% down payment would need to earn about $70,000 a year to afford a $400,000 house.
The rule of 2.5 times your income stipulates that you shouldn't purchase a house that costs more than two and a half times your annual income. So, if you have a $50,000 annual salary, you should be able to afford a $125,000 home.
What house can I afford on 60k a year? ›
Based on Bankrate's mortgage calculator, you should look for a home that costs $200,000. If you can afford a 20 percent down payment — $40,000 — your monthly principal and interest payment for that size mortgage loan will be $1,118.
Can a single person afford a 400k house? ›
Your payment should not be more than 28%. of your total gross monthly income. That means you'll need to make 11,500 dollars a month, or 138 k per year. in order to comfortably afford this 400,000 dollar home.
What is the 28 rule in mortgages? ›
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance.
Is 100K a good salary for a single person? ›
You'll be able to live the high life on a $100K annual salary in roughly 95% of California, geographically. The vast majority of the state is quite rural and very affordable, not much more than lower profile states like Kentucky or West Virginia.
How much house can I afford if I make $70,000 a year? ›
One rule of thumb is that the cost of your home should not exceed three times your income. On a salary of $70k, that would be $210,000. This is only one way to estimate your budget, however, and it assumes that you don't have a lot of other debts.
How much is a 350k mortgage per month? ›
Monthly Payment Breakdown by APR and Term
| Interest rate | 15-year term | 30-year term |
|---|
| 5.5% | $2,860 | $1,987 |
| 6% | $2,953 | $2,098 |
| 6.5% | $3,049 | $2,212 |
| 7% | $3,146 | $2,329 |
5 more rowsAug 28, 2023
In today's climate, the income required to purchase a $500,000 home varies greatly based on personal finances, down payment amount, and interest rate. However, assuming a market rate of 7% and a 10% down payment, your household income would need to be about $128,000 to afford a $500,000 home.
How much is a 500K mortgage per month? ›
As noted above, your estimated monthly payment for a $500K mortgage will be $3,360.16, assuming a 30-year loan term and an interest rate of 7.1%. But this payment could range between $2,600 and $4,900 depending on your term and interest rate.
