A $450,000 fixed-rate mortgage, with an annual percentage rate (APR) of 7.3% and a 30-year term, would cost you $3,085.07 per month, or $37,020.84 per year in combined principal & interest payments. Of course, your exact payment would depend on your interest rate and other individual factors.
The same loan amount with a 15-year fixed-rate loan would warrant a lower mortgage rate, but the monthly payment would be higher due to the compressed repayment period. For example, a 15-year mortgage for $450,000 with a 6.3% APR would cost $3,870.68 per month, or $46,448.16 per year.
Keep in mind that these costs factor in your mortgage alone but don’t account for any taxes, fees, insurance, or other payments you may incur over your ownership period. Let’s break down the expected costs of a $450K mortgage payment as well as any additional expenses you’ll need to keep in mind over the life of your loan.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Total Cost of a $450K Mortgage
While it’s easy to focus on your monthly mortgage payment, the economics of taking out one of the many different types of home loans become more pronounced when you weigh the total lifetime cost of the loan.
To put this into perspective, the total cost of the 30-year $450,000 mortgage quoted above at an APR of 7.3% would cost you $1,110,624.90 in payments over the life of the loan. If you were to make every single payment on schedule without any prepayments or late payments, you would pay $660,624.90 in interest over 30 years. A shorter mortgage term would result in significant savings on interest.
Owning a home also involves other costs aside from your mortgage, including things like maintenance, and property taxes; we’ve broken these down into the upfront and long-term costs below.
💡 Quick Tip: SoFi’s new Lock and Look+ feature allows you to lock in a low mortgage financing rate for up to 90 days while you search for the perfect place to call home.
Upfront Costs
Upfront costs on a home usually consist of all the expenses required to close on your home purchase, including closing costs, your down payment, and any earnest money you put down on the property.
While your earnest money and down payment are rolled into the purchase price of the home and will eventually come back to you in the form of home equity, closing costs consist of fees to compensate lenders, agents, and other third-parties for the services they provide to facilitate your home purchase.
Earnest money This generally won’t be more than 1-2% of the home’s purchase price and can be rolled into the down payment on your home. It serves as a good-faith deposit to show that you’re serious about buying a home.
Down payment On average, down payments typically make up 3-20% of the purchase price of the home according to the underwriting standards of most major mortgage programs. Lenders usually require a down payment contribution to ensure that buyers have some “skin” in the game, which reduces the likelihood of default on a loan. You also may wish to contribute a greater down payment upfront if you can afford it, as it also directly reduces the amount you need to borrow on your mortgage.
Closing costs Average upfront closing costs will typically set the buyer back 2-5% of the total purchase price of your home, however the amount paid will vary depending on the taxes and fees in your area as well how the fees are allocated between the buyer and seller.
Long-Term Costs
Long-term costs include property taxes, homeowner’s insurance, maintenance, and utility bills.
Property taxes These are levied annually and can vary anywhere from around 0.5% of your home’s assessed value to as high as 3% or more depending on your state and county of residence.
Insurance The average cost of homeowners insurance in the United States is $1,393 per year. However, this can vary widely depending on your policy terms and property type. In many cases, you can save hundreds of dollars on your home insurance each year by shopping around for the best provider.
Maintenance Maintenance expenses vary widely depending on the age and condition of your home. Generally, it’s a good idea to set aside 1-2% of the cost of your home annually for emergency expenses such as roof repairs, plumbing issues, or appliance repairs.
Don’t forget to factor in homeowners association, co-op, or condo fees if these apply to your purchase.
Recommended: First-Time Homebuyers Guide
Estimated Monthly Payments on a $450K Mortgage
The estimated monthly payment on a $450K mortgage with a 7.3% APR and 30-year loan term is $3,085.07. The interest payments on fixed-rate mortgage loans are front-weighted, which results in $4,313 worth of principal paid back within the first year, even though you’ve made total payments of $37,020.83.
As principal is paid off over time, the balance on which interest accrues will decline. As a result, the majority of your monthly payments made during the early years of your mortgage will be dedicated towards interest. During the later years, the principal portion making up your monthly payment will increase as well, accelerating the rate at which you pay off your mortgage.
Here’s an amortization table showing how that plays out over the life of the loan:
| Year | Beginning balance | Interest paid | Principal paid | Ending balance |
|---|---|---|---|---|
| 1 | 450,000.00 | $32,707.58 | $4,313.25 | $445,686.75 |
| 2 | $445,686.75 | $32,381.96 | $4,638.87 | $441,047.89 |
| 3 | $441,047.89 | $32,031.76 | $4,989.07 | $436,058.82 |
| 4 | $436,058.82 | $31,655.13 | $5,365.71 | $430,693.11 |
| 5 | $430,693.11 | $31,250.05 | $5,770.78 | $424,922.34 |
| 6 | $424,922.34 | $30,814.40 | $6,206.43 | $418,715.91 |
| 7 | $418,715.91 | $30,345.86 | $6,674.97 | $412,040.94 |
| 8 | $412,040.94 | $29,841.95 | $7,178.88 | $404,862.06 |
| 9 | $404,862.06 | $29,300.00 | $7,720.83 | $397,141.23 |
| 10 | $397,141.23 | $28,717.13 | $8,303.70 | $388,837.53 |
| 11 | $388,837.53 | $28,090.26 | $8,930.57 | $379,906.97 |
| 12 | $379,906.97 | $27,416.07 | $9,604.76 | $370,302.21 |
| 13 | $370,302.21 | $26,690.98 | $10,329.85 | $359,972.36 |
| 14 | $359,972.36 | $25,911.16 | $11,109.67 | $348,862.69 |
| 15 | $348,862.69 | $25,072.46 | $11,948.37 | $336,914.31 |
| 16 | $336,914.31 | $24,170.44 | $12,850.39 | $324,063.93 |
| 17 | $324,063.93 | $23,200.33 | $13,820.50 | $310,243.43 |
| 18 | $310,243.43 | $22,156.99 | $14,863.84 | $295,379.58 |
| 19 | $295,379.58 | $21,034.87 | $15,985.96 | $279,393.63 |
| 20 | $279,393.63 | $19,828.05 | $17,192.78 | $262,200.85 |
| 21 | $262,200.85 | $18,530.12 | $18,490.71 | $243,710.14 |
| 22 | $243,710.14 | $17,134.21 | $19,886.62 | $223,823.52 |
| 23 | $223,823.52 | $15,632.92 | $21,387.91 | $202,435.60 |
| 24 | $202,435.60 | $14,018.28 | $23,002.55 | $179,433.06 |
| 25 | $179,433.06 | $12,281.76 | $24,739.07 | $154,693.99 |
| 26 | $154,693.99 | $10,414.14 | $26,606.69 | $128,087.30 |
| 27 | $128,087.30 | $8,405.53 | $28,615.30 | $99,472.01 |
| 28 | $99,472.01 | $6,245.29 | $30,775.54 | $68,696.46 |
| 29 | $68,696.46 | $3,921.96 | $33,098.87 | $35,597.59 |
| 30 | $35,597.59 | $1,423.24 | $35,597.59 | $0 |
💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
How Much Interest Is Accrued on a $450K Mortgage?
One choice you will need to make is the term of your loan. Often the choice is a 30-year versus a 15-year loan term. Over a 30-year term, a $450K mortgage with a 7.3% APR will accrue $660,624.90 in total interest expense over the life of the loan, assuming no prepayments. A similar loan balance with the same interest rate and a 15-year loan term will accrue $291,703.73 worth of interest.
The amount of interest accrued on a mortgage is directly related to the loan balance, interest rate, and speed at which the loan is repaid. The faster a loan is repaid, the less interest that is accrued on the loan balance. This is because the interest has less time to accrue as the loan is paid off.
Monthly Payment Breakdown by APR and Term
We’ve broken down the estimates for a $450K mortgage payment across two interest rates, assuming both 30-year and 15-year terms. Try using a mortgage payment calculator to estimate the payments on your loan terms.
| Interest rate | 30-yr term | 15-yr term |
|---|---|---|
| 5% | $2,416 | $3,559 |
| 5.5% | $2,555 | $3,677 |
| 6% | $2,698 | $3,797 |
| 6.5% | $2,844 | $3,920 |
| 7% | $2,994 | $4,045 |
| 7.5% | $3,146 | $4,172 |
| 8% | $3,302 | $4,300 |
What Is Required to Get a $450K Mortgage?
To qualify for a $450K mortgage, you’ll need to meet minimum income and credit requirements, have enough funds on hand for the lender-mandated down payment, and fall within loan limits for the property type you’re attempting to purchase in your area. We’ve spelled out each step of the process below.
1. Estimate your budget and review your finances
You can start by pulling a copy of your credit report and conducting an honest review of your budget. All Americans are entitled to one free copy of their credit report each year at Annualcreditreport.com; it’s important to do a detailed review of your credit history to ensure everything is correct and address any outstanding issues.
It’s a good idea to shore up your credit score by taking care of any outstanding debt, within reason, prior to starting the loan approval process. Your credit profile doesn’t have to be perfect, but it’s important to ensure it’s as spotless as possible to 1) increase your probability of being approved, and 2) ensure you get the best terms on your loan.
2. Get prequalified with multiple mortgage lenders
This step will give you an estimate of how much home you can afford. During this step, each lender will do a soft-pull on your credit report, calculate your debt-to-income (DTI) ratio, and give you a sense of how much you would be eligible to borrow at what interest rate. From there, you’ll move on to getting preapproved for a mortgage in the amount you think you will need to purchase a home.
Recommended: Home Loan Help Center
3. Place a bid on your dream home
You’ll work with an agent to scout homes in your top neighborhoods and identify your potential dream home. It’s important to have your lender preapproval in hand when you arrive at this step in the process, as that signals to both your agent and home sellers that you’re serious about buying a home.
4. Complete the mortgage application process
Once you’ve submitted a bid and had your offer accepted, you’ll furnish your chosen lender with more financial documentation so that it can formally underwrite your mortgage loan. All your terms will be finalized during this formal mortgage application stage.
5. Close on your home
Assuming no hiccups arise during the underwriting process, once your loan is formally approved, the only thing to do is wait for the closing date and ensure all legal forms are signed and payments are transferred in good order. Congratulations!
The Takeaway
A $450,000 mortgage could mean you’re spending between $2,400 and $4,300 per month to pay off your loan, depending on your interest rate and loan term. Even a fraction of a percentage point in your quoted interest rate can mean the difference of tens of thousands of dollars in interest payments over the life of your loan. Consequently, it’s important to get the best terms for your mortgage to maximize your value in this transaction.
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.
FAQ
How much does a $450,000 mortgage cost per month?
While the estimates will vary depending on your quoted interest rate and loan terms, a $450,000 mortgage with a 6% interest rate would cost $2,698 per month over 30 years.
What credit score is required for a $450K mortgage?
In most cases, the minimum FICO score required for a conventional $450,000 mortgage is 620, according to Fannie Mae’s underwriting guidelines. However, to qualify for the best terms, you’ll want your credit score to be as high as possible.
Photo credit: iStock/Hispanolistic
+Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 90 calendar days at the time of preapproval. Credit card information to maintain the lock must be received within 7 calendar days of preapproval, or the lock will be forfeited. If you have not submitted a fully executed purchase contract within 60 days of your initial rate lock, you will be charged 0.25% of the loan amount. When you close with SoFi, the 0.25% fee will be credited back to you at the time of closing.
If you submit a fully executed purchase contract within 30 days of the initial rate lock, SoFi will automatically reduce the interest rate by an additional 0.125% at no cost. If current market pricing improves by 0.75 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for an additional rate reduction. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.
*SoFi requires 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. Minimum down payment varies by loan type.
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Source: sofi.com