What would my monthly payment be on a $600,000 home?
Buying a home is a major step in life. It's also a major financial decision — and not one to be taken lightly. After all, buying a home involves putting down a significant amount of money as a down payment and agreeing to make monthly mortgage payments to pay off the mortgage loan you borrowed with to buy the house.
Knowing exactly what your down payment would be before you start the process of buying a home allows you to figure out what your monthly budget will look like and how your mortgage payment will fit into it. Let's consider a $600,000 home and see what your mortgage payments might look like with a few types of popular home loans.
Ready to buy a home now? Shop online and find the right mortgage loan for you.
What would my monthly payment be on a $600,000 home?
Your monthly payment on a $600,000 home will depend on a few factors, including how big of a down payment you make, your interest rate and your loan term. For this exercise, we're going to assume you are making a 20% down payment on the house. That means you are paying $120,000 upfront and borrowing $480,000. Putting 20% also means you avoid the private mortgage insurance (PMI) requirement.
Here is what you would pay each month if you used a few popular types of mortgages.
Example 1: 30-year fixed rate mortgage at 6.93%
One of the most common types of mortgages is a 30-year fixed-rate mortgage. This means you pay your home off over 30 years, and your rate does not change during the term of the mortgage.
As of December 28, 2023, the national average rate for a 30-year fixed-rate mortgage was 6.93%. Your actual rate will be based on many factors including where you live and your credit history.
With that rate on the $480,000 needed in this scenario, you'd pay $3,170 per month in principal and interest. Keep in mind that that payment does not include property taxes or homeowners insurance, which will vary based on where you live.
With this loan, you'd pay $662,305 in interest for a total loan payment of $1,142,305. When adding in the $120,000 down payment, your house would cost a total of $1,262,305 over the life of the loan.
Find the right mortgage loan for you online today.
Example 2: 15-year fixed rate mortgage at 6.32%
Another popular type of mortgage is a 15-year fixed-rate loan, where the rate is locked in and the loan is paid off over 15 years. Right now, the national average rate for this type of loan is 6.32% as of December 28, 2023.
If you put 20% down on a $600,000 home and borrowed the rest with these terms, you'd pay $4,133 in principal and interest. Again, when budgeting, don't forget to factor in property taxes and homeowners insurance, using local rates to figure out your cost.
With these loan terms, you'd pay a total of $264,228 in interest for a total loan payment of $744,228. With the down payment included, your house would have a total price tag of $864,228.
Example 3: Adjustable-rate mortgage
The last example is a $600,000 home purchased with an adjustable rate mortgage, also known as an ARM. With an ARM loan, your mortgage rate can change, typically once per year, based on the overall rate environment and the current rates offered by your lender.
Most ARMs start with a fixed rate for a certain period, and after that, the rate can change at regular intervals. For instance, a 5/1 ARM has a fixed rate period of five years and after that, the rate can be adjusted either up or down once per year.
Unfortunately, if you're using an ARM loan, it is only possible to determine the fixed monthly mortgage payment. After that period ends, your payment will change based on how the rate is adjusted.
The bottom line
Knowing how much you'll pay monthly on a home purchase is key to determining whether you can afford to buy a house at a specific price point and mortgage rate. With fixed-rate mortgages, you can determine ahead of time exactly how much you'll owe each month for the entire term of your mortgage. With an ARM, your monthly payment will change each time your rate is adjusted, making budgeting a bit more difficult.
