For most people, the mortgage rate theyre offered plays a significant role in whether or not it makes sense to buy a home. Since the interest rate on your mortgage is lower, your monthly payments will usually be lower and you will pay less in interest over the life of the loan. So, waiting for even a slight drop in rates could mean the difference between affording a home purchase and being priced out.
At 6. 43%, todays mortgage rates are a far cry from the sub-3% rates that were common during the pandemic. But while todays rates seem high comparatively, theyre actually pretty normal by historical standards. Plus, mortgage rates have dropped recently, with the average rate hitting a 15-month low earlier this month. Now that inflation is cooling, the Fed is also expected to cut rates for the first time in September, which could cause mortgage rates to drop even further.
Given these factors, you may be wondering whether its the right time to lock in your mortgage rate. The answer to that question is personal, but knowing how much it might cost at the moment can help you make a smart choice. We’ll figure out how much a $350,000 mortgage would cost at the current rates and how much you could save if rates keep going down.
Taking out a $350,000 mortgage is a major financial decision that requires careful consideration. As a potential homebuyer, it’s important to understand how much a mortgage of this size could cost on a monthly basis before moving forward. In this comprehensive guide, we’ll break down the key factors that determine your mortgage payment and provide estimates to help you budget.
What Impacts Your Monthly Mortgage Payment
Several elements work together to shape your monthly mortgage costs. The most important are
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Mortgage Amount: Also known as your loan balance or principal, this is the amount you actually borrow – in this case, $350,000. The higher the mortgage amount, the larger your monthly payments.
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Interest Rate Expressed as a percentage this is the cost of borrowing money for your loan. The lower the interest rate the more affordable your monthly payment. Rates are influenced by economic factors as well as your credit score and history.
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Loan Term: Most mortgages are available in 10, 15, 20, or 30-year terms. The longer the repayment period, the lower your monthly costs but the more interest you pay over the life of the loan.
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Real estate taxes and insurance: Most lenders want you to pay these costs through an escrow account as part of your mortgage payment. This increases your monthly payment.
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Upfront Fees: Closing fees, application fees, and other fees you pay up front may be added to the amount you borrow, which may make your monthly payment a little higher.
Estimating Your Monthly Mortgage Payment
As a general guideline, you can expect a monthly payment between $1,500 and $2,800 for a $350,000 mortgage, depending on your precise loan details.
Here are some estimates based on common scenarios:
- 30-year fixed mortgage with 4% interest = $1,665 monthly
- 15-year fixed mortgage with 3.5% interest = $2,412 monthly
- 30-year FHA mortgage with 3.5% interest = $1,584 monthly
- 30-year VA mortgage with 2.25% interest = $1,493 monthly
To get a more accurate estimate, use an online mortgage calculator and input your specific details. Adjust the home price, down payment, interest rate, taxes, insurance, and other costs to see the impact.
Factors That Affect Your Interest Rate
While economic conditions dictate baseline mortgage rates, your personal financial profile directly influences the interest rate lenders will offer you. Key influencing factors include:
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Credit Score: The higher your score, the lower the rate you can qualify for. Aim for a score of 740 or above for the best pricing.
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Down Payment Amount: A down payment of 20% or more of the home’s value gets you a better rate than a smaller down payment.
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Debt-to-Income Ratio: Lenders analyze your current debts compared to income. The lower your DTI, the better your rate.
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Loan Type: Government-backed loans like FHA and VA mortgages offer lower rates than conventional loans with the same down payment.
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Interest rates can be a little different depending on the state and region where you live. Check rates in your local area.
How Much Interest Will You Pay?
One major factor to understand is the total amount of interest you’ll pay over the full loan term. This varies greatly depending on your mortgage length and rate.
For example, on a $350,000 loan:
- 30-year mortgage at 4%: $215,560 total interest
- 15-year mortgage at 3.5%: $104,724 total interest
The longer timeline and higher rate of the 30-year option means you ultimately pay more in interest. An amortization schedule calculator shows interest vs principal by month and year over the loan.
What Down Payment Will You Need?
The standard down payment amount is 20% of the purchase price. On a $350,000 home, that equals $70,000. However, many lenders offer mortgages with lower down payments:
- Conventional 97: 3% down payment on $350,000 is $10,500
- FHA loan: 3.5% down payment on $350,000 is $12,250
- VA loan: 0% down payment for qualifying buyers
A higher down payment reduces the amount you have to borrow and can help you qualify for a better interest rate. Carefully weigh the pros and cons of putting more money down vs investing elsewhere.
How Can You Get Pre-Approved?
Pre-approval provides a key benchmark to determine what you can realistically afford. To get pre-approved:
- Check your credit reports and scores so you know where you stand.
- Calculate your ideal monthly mortgage payment based on your budget.
- Collect financial statements and documents lenders will require.
- Complete online pre-approval applications with multiple lenders.
- Compare pre-approval letters detailing loan amount, rate, and costs.
- Identify the lender and loan program that best fits your situation.
Other Costs to Account For
Beyond the mortgage payment itself, be sure to budget for costs like:
- Property taxes: Typically 1-3% of the home’s value per year. Can be paid via escrow account.
- Home insurance: Shop around for quotes based on factors like property location and type.
- Mortgage insurance: Usually required if you put less than 20% down to protect the lender.
- HOA fees: For properties in homeowner’s associations, fees cover amenities and maintenance.
- Maintenance and repairs: Budget 1-3% of the home’s value annually for upkeep costs.
- Closing costs: Application fees, title insurance, recording fees and more. Often 2-5% of the total loan amount.
Carefully factoring in these ownership costs will give you a complete picture of affordability.
The Bottom Line
A $350,000 mortgage will cost roughly $1,500 to $2,800 per month depending on your situation. To create an accurate budget, use a mortgage calculator customized with your details, get pre-approved with lenders, and account for all ownership costs. Select a down payment amount and loan term that fits your financial situation. With diligent planning, you can feel confident about taking on a $350,000 mortgage.
How much would a $350,000 mortgage cost per month?
The interest rate and down payment are the two most important things that affect how much your mortgage loan costs. The calculations below assume a 20% down payment ($70,000) on the home, which is necessary to avoid paying for private mortgage insurance (PMI). These figures do not include property taxes and homeowners insurance, which can vary significantly depending on the location.
Heres what you can expect to pay monthly on a $350,000 loan at todays rates:
- 30-year mortgage at 6.43%: $1,756.92 per month
- 15-year mortgage at 5.83%: $2,337.16 per month
The 15-year mortgage has a higher payment of about $580 more per month, but you can pay it off in half the time, which could save you a lot of money in interest over the life of the loan.
But what if rates continue to fall? Lets explore a scenario where the Federal Reserve implements two 25-basis-point cuts in the coming months. While mortgage rates dont move in perfect sync with Fed rate changes, we can estimate.
If rates fall by 25 basis points to 6. 18% and 5. 58%, respectively, heres what a $350,000 mortgage loan would cost:
- 30-year mortgage at 6.18%: $1,711.28 per month
- 15-year mortgage at 5.58%: $2,299.74 per month
If rates were to then fall by another 25 basis points to 5. 93% and 5. 33%, respectively, heres what a $350,000 mortgage loan would cost:
- 30-year mortgage at 5.93%: $1,666.16 per month
- 15-year mortgage at 5.33%: $2,262.65 per month
You could save about $91 a month on a 30-year mortgage or $72 a month on a 15-year mortgage if you wait for rates to possibly drop even more. This is how the current rates compare to what they would be after two rate cuts.
However, its important to note that waiting for the “perfect” rate comes with its own set of risks. As rates fall, more buyers may enter the market, increasing competition and potentially driving up home prices — similar to what we saw during the height of the pandemic. The time spent waiting is time you could have also been building equity in your home.
If you were to purchase a home at todays average rates with a $350,000 mortgage loan, you can expect the monthly payments (principal and interest only) to range from $1,756.92 to $2,337.16 (depending on the loan term you choose). While waiting for rates to drop further could potentially save you about $100 per month or so, that may not be the best plan. After all, the potential savings could be negated by the risks that come with a more competitive market — and the missed opportunity for building equity.
Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
How To Qualify For A $350,000 Mortgage
FAQ
How much is the monthly payment on a 350K loan?
If you borrow $350,000 today, you’ll pay the following each month: 30-year mortgage at 6% 43%: $1,756. 92 per month. 15-year mortgage at 5. 83%: $2,337. 16 per month.
What is the average payment on a $350,000 mortgage?
The monthly payment on a $350,000 could range from $2,098 to $2,568. Find out how your interest rate, loan term, and other factors impact your total. Aly J.
What salary do you need for a 350K mortgage?
Income: Aim for a combined gross annual income between $87,000 and $110,000. This is a starting point, and your actual needs may vary. Down Payment: A larger down payment means a smaller loan and lower monthly payments. This can significantly impact the income you need.
How much is a 20 down payment on a $350 000 house?
Calculating Monthly Mortgage Payment Here’s a rough estimate of monthly payments (principal and interest only) for a $350,000 house with a 30-year fixed mortgage at 6% interest: 20% down: ~$1,679/month. 10% down: ~$1,889/month. 5% down: ~$1,994/month.