What Is the Monthly Cost of a $500,000 Mortgage? | SoFi (2024)

By Kenny Zhu ·September 05, 2023 · 8 minute read

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What Is the Monthly Cost of a $500,000 Mortgage? | SoFi (1)

The monthly cost of a $500,000 mortgage is $3,360.16, assuming a 30-year loan term and a 7.1% interest rate. Over the course of a year, you would pay $40,321.92 in combined principal and interest payments.

If you were to opt for a 15-year term instead, a $500,000 mortgage at an interest rate of 6% would cost you $4,219.28 per month, or $50,631.36 per year. (Generally speaking, 15-year terms feature lower interest rates than 30-year terms.)

As you can see, the monthly cost of a mortgage can vary widely depending on your terms; you’ll want to factor this in alongside the other short- and long-term costs of homebuying, like lender fees, property taxes, and maintenance. We’ll guide you through these expenses and how they factor into your budget.

Table of Contents

  • Total Cost of a $500K Mortgage
  • Estimated Monthly Payments on a $500K Mortgage
  • How Much Interest Is Accrued on a $500K Mortgage
  • $500K Mortgage Amortization Breakdown
  • What Is Required to Get a $500K Mortgage
  • The Takeaway

Total Cost of a $500K Mortgage

The total cost of a $500K mortgage is $1,209,657.53 over 30 years at a 7.1% APR. Absent any late or pre-payments, this sums up to $709,657.53 worth of accrued lifetime interest.

When calculating your total costs, you’ll want to factor in other expenses like closing costs, as well as property taxes and insurance, which are incurred for as long as you own your home. We’ve categorized these expenses into upfront and long-term costs below.
💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you from start to finish.

Key Points

• A $500,000 mortgage can cost over $2,500 per month, depending on the interest rate and loan term.

• Factors that affect the monthly cost of a mortgage include the loan amount, interest rate, loan term, and property taxes.

• Private mortgage insurance (PMI) may be required if the down payment is less than 20% of the home’s value.

• Homeowners insurance and property taxes are additional costs to consider when budgeting for a mortgage.

• It’s important to carefully consider your budget and financial goals before taking on a mortgage to ensure you can comfortably afford the monthly payments.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Upfront Costs

Your average upfront closing costs will usually set you back 2% – 5% of the total purchase price on your home. The actual amount varies depending on your local tax rate and third-party fees. Closing costs typically include the following:

Abstract and recording fees: $200 to $1,200 and $125, on average, respectively

Application fees: up to $500

Appraisal fees: $300 to $400

Attorney fees: $150 to $400/hour

Home inspection fee: $300 to $500, on average

Title search and title insurance fees: $75 to $200

The other two major upfront costs include the earnest money deposit and your down payment on the house. Your earnest money deposit shows the seller that you’re serious about buying the home, while the down payment serves as security for your mortgage lender. Average down payments usually range from 3% – 20% of the home’s purchase price, based on most popular mortgage underwriting guidelines. Earnest money and the down payment differ from closing costs as you’ll recoup these, in the form of equity in your home, after closing.

Long-Term Costs

Long term costs on a home purchase include property taxes, homeowner’s insurance, and upkeep. Many lenders will simplify your annual payments by rolling taxes into escrow alongside your monthly mortgage payments. Homeowners who opt out of escrow will be responsible for making their own payments.

Property taxes can range from 0.5% – 3% or more of your home’s assessed value. Keep in mind that the assessed value isn’t the same thing as your home’s market value; instead, it is the value local tax assessors use for calculating property taxes.

Average homeowners insurance rates vary widely depending on your state of residence, policy terms, and the condition of your home. Policy rates are usually between $999 and $1,655, according to a study on home insurance policies conducted by Progressive.

Maintenance and upkeep costs are some of the most variable expenses you’ll face on your home. You may have to repair your roof or replace your water heater in some years, but in others, you may get lucky and avoid big expenses. It’s a good idea to set aside 1% – 2% of your home value annually to cover these projects if they pop up.

Estimated Monthly Payments on a $500K Mortgage

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. It’s helpful to take a closer look at how these factors impact the monthly charge, as we have in the chart below.

Monthly Payment Breakdown by APR and Term

Assuming both 30-year and 15-year loan terms, we’ve broken down the monthly payment estimates for interest rates ranging from 5% – 8.5%. If you don’t see your rate below, try using our mortgage payment calculator to estimate your required monthly payment.

Interest rate30-year term15-year term

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How Much Interest Is Accrued on a $500K Mortgage?

A $500K mortgage with a 7.1% APR will accrue $709,657.53 worth of total interest over 30 years. A 15-year mortgage with the same loan balance and interest rate will accrue $313,985.44 in interest over the lifetime of the loan.

Interest accrues directly in relation to your outstanding loan balance, APR, and rate of repayment. The faster you repay your home loan, the less time interest has to accrue.

Additionally, larger loan balances will accrue more interest at any given rate, as larger balances mean a larger principal base on which interest is calculated. Similarly, higher interest rates accrue interest faster, as the APR multiple used to calculate your interest expense is greater for all loan balances.
💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls.

Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

$500K Mortgage Amortization Breakdown

It’s helpful to put monthly payments on a $500K mortgage in context by looking at an amortization schedule, which breaks down payments by interest and principal. In the example below of a 15-year, $500,000 mortgage at 6%, you can see that only $21,208.34 worth of principal was paid off after the first year, despite having made more than $50,000 worth of total payments. This is due to the front-weighted nature of amortizing loans.

Interest is calculated off the total principal amount of the loan outstanding. This means that your interest expense will be greater during the early years of home loan, when the remaining loan balance is greatest.

As time passes and principal is paid off, your interest expense will gradually decrease over time. This is why many homebuyers choose to contribute a larger down payment upfront to avoid having to pay more interest.

YearBeginning balancePrincipal paidInterest paidRemaining balance

What Is Required to Get a $500K Mortgage?

To qualify for a $500K mortgage, you’ll need to ensure that you meet the income, credit, and down payment requirements, while still having enough leftover to cover additional long-term costs like taxes and home insurance.

While income requirements can vary by lender, a good rule of thumb to follow is the 28% rule, which states that your total housing costs should make up no more than 28% of your monthly gross income. This isn’t a hard and fast rule, but serves as a good indicator of whether you can afford your mortgage.

For example, if your $500K mortgage carried a 6% APR and a monthly payment of $2,997, and you had another $300 in monthly housing costs, you’d need a minimum gross monthly income of $12,000, or annual income of $144,000, to fall within the 28% rule.

You’ll also need a minimum credit score of 620 or higher to meet the lender’s credit guidelines. 620 is only the minimum bar to qualify according to mortgage lending guidelines, and your likelihood of approval may still be tenuous at this level.

In most cases you’ll want your credit score to be much higher; preferably 740 or more, to ensure you can qualify for the most competitive interest rates.

Finally, depending on the type of mortgage loan you obtain, you’ll need to provide a minimum down payment on the home. In many cases, this is 20% of the overall home value. For a $625,000 home with a $500,000 mortgage, a 20% down payment would be $125,000.

The Takeaway

Committing to pay off a $500,000 mortgage loan is a significant decision. You’ll be on the hook for thousands of dollars a month in mortgage payments. Even slight variations in your interest rate can increase the lifetime cost of the loan by tens of thousands of dollars, so looking carefully at your mortgage’s total cost is important.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.


How much does a $500,000 mortgage cost per month?

The monthly cost of a $500,000 mortgage can vary widely based on your quoted interest rate and loan term. Assuming a 6% APR and 30-year term, a $500,000 mortgage would cost you a $2,997 monthly payment, without factoring in any taxes or insurance.

What credit score is required for a $500K mortgage?

A $500,000 mortgage would fall within the standard guidelines for conventional home loans in most cases. For a standard fixed rate mortgage, Fannie Mae requires a minimum credit score of 620.

Photo credit: iStock/andresr

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


What Is the Monthly Cost of a $500,000 Mortgage? | SoFi (2024)


What Is the Monthly Cost of a $500,000 Mortgage? | SoFi? ›

Monthly payments on a $500,000 mortgage by interest rate

At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $3,327 a month, while a 15-year might cost $4,494 a month.

How much would a $500,000 mortgage cost per month? ›

Monthly payments on a $500,000 mortgage by interest rate

At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total $3,327 a month, while a 15-year might cost $4,494 a month.

What credit score do you need for a $500,000 mortgage? ›

No mortgage insurance. Just a single funding fee on closing. Include your closing costs in the home loan (VA refinance only) Expect most mortgage lenders to want minimum credit scores of 620 or even 640.

What are the monthly repayments on a $500,000 mortgage? ›

Compare Repayments on $500,000 Mortgages

A 30 year mortgage at 2.32% should cost you $1,929 principal and interest repayments per month, with $194,387 in total interest. A 30 year mortgage at 2.66% should cost you $2,017 principal and interest repayments per month, with $226,281 in total interest.

What is a good down payment for a $500,000 house? ›

Conforming loan down payments can vary from 3% to 20% or more, so for a $500,000 home, you'd need between $15,000 and $100,000. Conforming loans, once again, follow Fannie Mae and Freddie Mac guidelines and usually offer competitive terms.

How much income to afford a $500,000 mortgage? ›

Since many lenders don't want more than 28% of a person's income to go toward their mortgage debt, borrowers will generally need an annual combined household income of at least $120,000 to buy a $500,000 house.

How to pay off a $500,000 mortgage in 5 years? ›

Increasing your monthly payments, making bi-weekly payments, and making extra principal payments can help accelerate mortgage payoff. Cutting expenses, increasing income, and using windfalls to make lump sum payments can help pay off the mortgage faster.

How much house can I afford if I make $70,000 a year? ›

As a rule of thumb, personal finance experts often recommend adhering to the 28/36 rule, which suggests spending no more than 28% of your gross household income on housing. For someone earning $70,000 a year, or about $5,800 a month, this means a housing expense of up to $1,624.

How much salary to afford a 600k house? ›

The principal, interest and property mortgage insurance on $600,000 house with a 15% down payment and a 30-year, fixed-rate mortgage with 7% rate would cost $3,662. To afford this, you would need a monthly income of about $13,079 or an annual income of about $157,000.

How much income to 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.

Does paying $1 a day reduce interest? ›

The world according to TikTok is a weird and wonderful place, but it's no substitute for qualified financial advice. On our $500,000 mortgage above, paying an extra $1 a day will only reduce your repayment period to 19 years and nine months, saving you about $5,470 in interest.

How much is a 2k a month mortgage? ›

With $2,000 per month to spend on your mortgage payment, you are likely to qualify for a home with a purchase price between $250,000 to $300,000, said Matt Ward, a real estate agent in Nashville. Ward also points out that other financial factors will impact your home purchase budget.

Are interest rates going down in 2024? ›

The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025. Here's where mortgage interest rates are headed for the rest of the year and how that will impact the housing market as a whole.

What credit score do you need for a 500K mortgage? ›

To qualify for most types of mortgages, you'll need a credit score of at least 620. Some loan types, such as FHA loans, accept lower scores, but a higher score will almost always get you the lowest available interest rate. And that could save you a significant amount over your loan term.

What credit score do I need to buy a house with no money down? ›

You'll usually need a credit score of at least 640 for the zero-down USDA loan program. VA loans with no money down usually require a minimum credit score of 580 to 620. Low-down-payment mortgages, including conforming loans and FHA loans, also require FICO scores of 580 to 620.

How much house can I afford with an 80k salary? ›

Using the 28% to 30% rule, your ideal maximum monthly payment shouldn't exceed $1,866 and $2,000. With that being said, if you're getting a 30-year fixed-rate mortgage with a 6% interest rate, you can likely afford a home valued up to $263,000 (including property taxes and insurance, and assuming a 5% down payment).

How much is a 600K mortgage per month? ›

If you're thinking of applying for a $600K mortgage, here's the bottom line: The monthly payment on this mortgage at a 7% annual percentage rate (APR) for 30 years works out to be $3,991.81. If you would rather finance with a 15-year mortgage, the monthly payment would be $5,392.97.

What would the monthly payment be on a $400,000 mortgage? ›

Monthly payments for a $400,000 mortgage
Annual Percentage Rate (APR)Monthly payment (15 year)Monthly payment (30 year)
3 more rows

What is the monthly payment on a $1000000 mortgage? ›

How much is $1,000,000 mortgage a month? You can expect to spend around $6,653 a month with a 30-year mortgage term and $8,988 a month with a 15-year term. This assumes you have a 7% interest rate (and doesn't take into account property taxes, mortgage insurance, and property insurance).

How much income for a 350k mortgage? ›

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.

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