When buying a home, the potential monthly payment can be a hefty concern — especially on a loan as big as $450,000. On mortgages of this size, interest costs can be significant, both monthly and over the long haul, so you’ll want to be well aware of these expenses before making your move. Depending on your interest rate, the monthly cost for a $450,000 mortgage with a 30-year repayment term could range from $2,697.98 to $3,301.94.
If you’re planning to take out a $450,000 mortgage, use this guide to understand what costs you can expect to pay over the life of the loan.
Monthly payments for a $450,000 mortgage
With a $450,000 mortgage and an annual percentage rate (APR) of 6%, you’d pay $3,797.36 per month for a 15-year loan and $2,697.98 for a 30-year loan. Keep in mind that these amounts only include principal and interest. In many cases, your monthly payment will also include other expenses, too.
Here’s a breakdown of what a typical mortgage payment includes:
- Principal: This goes straight toward your loan’s balance. You only pay a small amount toward your principal at the beginning of your loan and more as you get toward the end of your term.
- Interest: This is the cost of borrowing the money and is usually the biggest share of your payment at the start of your loan.
- Escrow: Many lenders will have you put money toward escrow each month, too. This type of account is used to store funds for future property tax and home insurance bills.
Here’s a quick look at what the monthly principal and interest payment would be for a $450,000 mortgage with varying rates:
Annual percentage rate (APR) | ||
|---|---|---|
6.00% | ||
6.25% | ||
6.50% | ||
6.75% | ||
7.00% | ||
7.25% | ||
7.50% | ||
7.75% | ||
8.00% |
Where to get a $450,000 mortgage
Since interest on a $450,000 home loan can be significant, you’ll want to shop around before taking out your mortgage. This can allow you to get the lowest interest rate possible and reduce your costs. Compare banks, credit unions, and other mortgage lenders to see how their rates and origination fees stack up.
Expert tip:
“When you apply for a mortgage, it's important to have certain financial details ready, including your income, estimated credit score, homebuying budget, and information about your assets and savings.” — Reina Marszalek, Senior Editor, Mortgages
What to consider before applying for a $450,000 mortgage
Knowing the total costs of the loan is critical before taking out a mortgage of this size. You should also understand what your closing costs will be (your lender can help you estimate these) and how much you’ll need for a down payment. Conventional loans often require at least 3% down. In many cases, you’ll have to pay for private mortgage insurance (PMI) if your down payment is less than 20%.
Total interest paid on a $450,000 mortgage
The exact amount of interest you’ll pay on a $450,000 loan will depend on your rate and your loan’s terms (how long the loan lasts). A shorter term will typically offer fewer interest costs than a loan with a longer term.
Example: A 30-year, $450,000 mortgage with an APR of 6% would mean paying a total of $521,271.85 in interest over the course of your loan.
For a 15-year mortgage with the same terms, you’d pay $233,524.03 in interest — around $287,747 less.
Amortization schedule on a $450,000 mortgage
You can use an amortization schedule to understand the principal and interest costs for each year of your loan, as well as the mortgage’s costs over the long haul.
As you can see in the examples below, your monthly payments largely go toward interest in the first few years of your loan. As you get closer to the end of your loan term, you’ll pay more toward the actual balance.
Here’s what an amortization schedule for a 30-year, $450,000 loan with a 6% fixed APR looks like:
Here’s one for a 15-year, $450,000 mortgage with a 6% fixed APR:
How to get a $450,000 mortgage
If you’ve considered the costs and think you’re ready to proceed with your $450,000 loan, the process is pretty simple.
Follow these steps to get a mortgage:
- Estimate your homebuying budget: Before you can buy a house, you need to determine what you can comfortably afford. You’ll need a clear picture of your monthly income, as well as the taxes, maintenance costs, homeowners association (HOA) dues, and other costs of homeownership. Use our mortgage calculator to help guide you.
- Pull your credit report: Your credit is going to heavily influence both your ability to get a mortgage and the interest rate you get if you do. Review your report and make sure there aren’t any negative marks (late payments, accounts in collections, etc.). If there are, you’ll need to settle these before applying for a loan.
- Get pre-approved for your loan: Getting pre-approved can give you a good idea of how much you’ll be eligible to borrow, as well as what price range you should be shopping in. A pre-approval can also give you a leg up in a competitive market. You should always seek approval from at least a few lenders to ensure you’re getting the best deal.
- Compare loan offers: Once you’ve gotten pre-approved by several lenders, you should compare your loan offers’ interest rate vs. APR, as well as mortgage points, closing costs, origination fees, and more. There’s also a spot on the third page of your loan estimate that tells you your total costs for the loan in five years. This can help you compare offers as well.
- Find a home and put in your bid: Next, you’ll need to find that dream home and submit your offer, along with your pre-approval letter. If the seller accepts, you can move on to the full mortgage application.
- Fill out your mortgage application: Fill out your chosen lender’s official mortgage application and provide any required documents. This might include your two most recent tax returns and W-2s, recent bank statements, pay stubs, and more.
- Wait for loan approval: Your mortgage application will move into the underwriting phase, which is when the lender verifies the details on your application and works to ensure you can repay the loan. Once you’re approved, you’ll be scheduled for a closing date.
- Get ready for closing: Before your closing date, get your down payment and closing costs ready, and review your final closing disclosures. If you have questions, ask your loan officer. You should also secure a homeowners insurance policy, as your lender will likely require this before finalizing your loan.
- Close on your loan: Finally, you’ll attend your closing appointment. This is when you’ll sign your paperwork, hand over your down payment and closing costs, and get your keys.
Monthly payments for different mortgage amounts
Mortgage calculators
Frequently asked questions
What is the down payment for a $450,000 home?
If you intend to put down 20%, it will require you to save up to $90,000. You may be able to make a smaller down payment if your lender allows, but you might have to pay for PMI. Some lenders require a minimum down payment of 3%, which would be $13,500.
How much do I need to earn to afford a $450,000 mortgage?
One financial guideline to follow is the 28% rule, which advises you to pay no more than 28% of your monthly income on housing. For example, consider the payment from the earlier amortization schedule, $2,697.98 for a 30-year mortgage with a fixed interest rate of 6%. You can divide the monthly payment by 28% to see what the monthly income should be ($2,697.98/0.28 = $9,635.64). Multiply that by 12 to calculate the annual salary to afford that payment: $115,627.68.
Can I afford a $450,000 mortgage with a $100,000 salary?
The mortgage’s interest rate and term will heavily influence your monthly payment. You can use a mortgage calculator to see what interest rates and terms could result in a payment that falls within 28% of your gross monthly income. For example, with a salary of $100,000, you’d calculate your monthly pre-tax income ($100,000/12 = $8,333.33). Then, multiply that by 28% to determine an affordable monthly payment ($8,333.33 x 0.28 = $2,333.33). For your payments to be affordable, it would be best not to exceed $2,333.33 depending on your other debts. You also could shop around for a lower interest rate or make a larger down payment so you need to borrow less.
