How Much Is the Monthly Payment For a $400,000 Mortgage?

By PropertyClub Team
Sep 1st 2023
The average sales price of a new home in the United States rose to over $410,000 in July 2023. That means anyone looking to purchase a home in an in-demand area should prepare to pay at least around that amount. 

But those who are buying a home for the first time or have been out of the market for a while may not know exactly what to expect in today’s climate. Here is a look at all the costs and considerations one should make when shopping for a $400,000 home.

hash-markMonthly Payments for a $400,000 mortgage

Your monthly mortgage payment will be split between paying interest to the bank as well as paying down the loan principal. Plus, your lender also may require additional fees for insurance, taxes, and escrow costs.

The lender will set the interest rate, and it will vary depending on your credit history and financial profile. In general, the higher your credit score and income, the more favorable your interest rate will be. The average mortgage rate for a 30-year fixed-rate mortgage is between 6 and 7.5%.

The monthly payment on a $400,000 mortgage at 6.5% for a 30-year fixed-rate loan would be $2,528. Keep in mind that the bulk of that payment will go toward the interest at the beginning of the loan term, not the actual loan balance. But over time, as the principal decreases, so will the amount of interest owed, allowing you to accrue more equity with each payment.

Also, be aware that you often have the option of choosing a different loan product, which will feature a different payment schedule. For instance, if you went with a 15-year fixed-rate loan, the monthly payment would be $3,514. This can be a smart option if you have the necessary income and want to pay down the loan faster.

hash-markTotal Interest Paid on a $400K Mortgage 

When you finance a home purchase with a mortgage, your payments are not going straight toward reducing the balance owed. They are also going toward paying the interest on the loan – which is essentially a fee for borrowing the money.

If you can buy your home with cash, then you won’t have to pay any interest. But if you are financing the purchase through an institutional lender such as a bank, they will charge you interest for borrowing the money.

Mortgage loans work differently than simple loans such as a credit card or personal loan, as it typically takes several decades to pay them off. So, the interest rate is not simply the percentage of the loan balance. It’s a monthly fee paid over time. 

The total interest paid on a 30-year fixed-rate loan of $400,000 at a 6.5% APR would be around $492,425. In comparison, a 15-year fixed-rate loan with the same terms would result in a total of $230,645 in interest.

That’s a difference of over $250,000 - which is pretty astonishing. But with a 15-year loan, you are making higher monthly payments, which means the interest gets paid down faster. This leads to the principal being reduced at a faster rate as well, which in turn impacts the amount of interest owed with each payment. So, the quicker you can pay down the principal, the less total interest you’ll owe in the long run.  

hash-mark$400000 mortgage amortization schedule 

If you need help understanding how mortgage payments work, an amortization schedule can be helpful. An amortization schedule will track how much of your payments are going toward interest and how much are going toward paying down the principal. This can be helpful to see how your money is being spent each month.

Let’s take the example of a 30-year fixed-rate mortgage at 6.5% with a monthly payment of $2,528.27. For the sake of simplicity, let’s ignore the down payment, insurance, and taxes. 

The amortization schedule for the first 6 months of the loan would look like this:

Beginning Balance



Ending Balance


$2,166.67 $361.61 $399,638.39


$2,164.7 $363.56 $399,274.83


$2,162.74 $365.53 $398,909.30


$2,160.76 $367.51 $398,541.78


$2,158.77 $369.50 $398,172.28


$2,156.77 $371.51 $397,800.77

As you can see, the monthly payment remains the same. But as the remaining balance shrinks, so does the amount of interest. This means that over time, a greater amount of the payment is going toward the principal. The change is gradual. But by the end of the loan, your payments will mostly go toward the principal if you’ve been consistent with paying on time.

hash-markHow to Get a $400,000 Mortgage

Most traditional lenders will be able to provide you with a $400,000 mortgage as long as you meet the necessary requirements. To qualify for the loan, you must be able to show sufficient income, a decent credit score, and a reasonable debt-to-income ratio.

Experts suggest that you don’t spend more than 28% of your income on your mortgage. This means that to comfortably afford a $400,000 mortgage at 6.5%, you should make around $95,000 per year in after-tax income (which means your salary should be over $125,000). 

Some lenders may require more income if you have additional monthly expenses such as car payments, student loans, credit card debt, etc. Or, if your credit score is low, you may be able to secure a good interest rate by showing more income than what is required. 

The exact qualifications will vary depending on the lender. But if you have good credit and low debt, this is the general ballpark of what you can expect to pay.  

To qualify for a 15-year fixed-rate mortgage with similar terms, you must show even more income because the monthly payments are higher. But you’ll also save money over the life of the loan.

hash-markWhere to Get a $400,000 Mortgage 

You can get a $400,000 mortgage at almost any bank, credit union, or online lender. But not every institution will offer the same terms and products. That’s why it’s important to shop around to ensure you get the best rate possible.

Before shopping for mortgages, make sure your financial profile is as strong as possible. This means gathering your tax documents and bank statements to know how much you can afford. If you can pay off any debt before applying for the loan, this could also help you secure a lower interest rate and save money over time.

Once you have your financials in order, you should visit various lenders to check your rate. The more lenders you contact, the better your chances of getting a good deal. 

But be aware that some lenders charge loan application fees. So, don’t go too crazy and apply all over town. Otherwise, you may be racking up unnecessary fees. Somewhere around 3-5 should be enough to find a rate that makes sense for your situation.