Monthly Payment for a $500,000 Mortgage
If you choose a 30-year-fixed-rate loan, your monthly payment would be around $2250 without taxes and fees. If you choose a 15-year fixed-rate loan at a rate of 5.4%, you’d be paying around $3,000 per month. But you’d also pay off the loan in half the time and save yourself in interest.
Of course, it could be less if you could secure a better rate or make a sizeable down payment. Likewise, it could be more if your financial profile isn’t as strong or you only put down 5-10%. But you should budget for somewhere between $2000 and $2500 per month.
Your monthly mortgage payment depends on a few factors, such as the down payment size and the interest rate offered by your lender. Assuming that you put down the standard 20% down payment (or $100,000), you’d be left with a principal balance of $400,000. The average mortgage rate for a $500,000, 30-year fixed-rate loan is around 5.4% for those with good credit.
Total Interest Paid on a $500,000 Mortgage
For a 30-year loan at 5.4%, you’d be paying $510,755.43 in total interest, and for a 15-year fixed-rate mortgage at 5.4%, you’d only pay $230,607.95 over the life of the loan. Mortgages aren’t free, so if you expect to borrow half a million dollars, you will be paying a considerable amount of interest over the life of the loan. The precise amount of interest you pay will largely depend on your rate and how quickly you pay off the loan.
$500,000 Mortgage Amortization Schedule
You can create an amortization schedule if you’d like to see exactly how much of your monthly payment is going toward the principal and how much is going toward interest. Amortization is the process of reducing debt with regular payments. Interest is calculated as a percentage of the remaining principal. So, as the principal decreases, the portion of the payment put toward interest will also be reduced. An amortization schedule can chart this progress.
Let’s take the above example. The amortization schedule for a 30-year fixed-rate loan of $500,000 at 5.4% would look like this:
|
|
Beginning Balance |
Interest |
Principal |
Ending Balance |
|
1 |
$400,000 |
$1,800.00 |
$446.12 |
$399,553.88 |
|
2 |
$399,553.88 |
$1,797.99 |
$448.13 |
$399,105.75 |
|
3 |
$399,105.75 |
$1,795.98 |
$450.14 |
$398,655.60 |
|
4 |
$398,655.60 |
$1,793.95 |
$452.17 |
$398,203.43 |
|
5 |
$398,203.43 |
$1,791.92 |
$454.20 |
$397,749.22 |
|
6 |
$397,749.22 |
$1,789.87 |
$456.25 |
$397,292.97 |
|
7 |
$397,292.97 |
$1,787.82 |
$458.30 |
$396,834.66 |
|
8 |
$396,834.66 |
$1,781.60 |
$460.36 |
$396,374.29 |
|
9 |
$396,374.29 |
$1,783.68 |
$462.44 |
$395,911.86 |
|
10 |
$395,911.86 |
$1,781.60 |
$464.52 |
$395,447.34 |
|
11 |
$395,447.34 |
$1,779.51 |
$466.61 |
$394,980.73 |
|
12 |
$394,980.73 |
$1,777.41 |
$468.71 |
$394,512.02 |
You can continue the schedule for as many weeks as you’d like. But as you consistently make payments toward the principal, the interest amount will naturally decrease until the balance is paid off completely.
How to Get a $500,000 Mortgage
To afford a $500,000 home, you should make at least $80,000 per year (although when you include taxes and fees, it may need to make closer to $100,000 to be on the safe side). This can be combined income if you purchase the home with a spouse or life partner. The exact income requirements will vary from lender to lender. But most experts agree that you shouldn’t spend more than 28% of your income on your mortgage payments.
Most conventional lenders require a credit score of 680 and above, but there are loan programs that accept lower scores for those who qualify. Every lender will have different requirements, but you need good credit and enough income to make payments comfortably.
Where to Get a $500,000 Mortgage
You can get a $500,000 mortgage from virtually any conventional lender, such as a bank or credit union. If you don’t meet the credit and income requirements of a conventional loan, other options are available, such as FHA, VA, and USDA loans.
What Is a FHA Loan?
An FHA loan is insured by the US Federal Housing Administration and allows borrowers to get a loan with as little as 3.5% down and a minimum 580 credit score. On the other hand, VA loans are strictly for veterans as a benefit of service and allow borrowers to get a loan with laxer requirements, including no money down.
What Is a USDA Loan?
USDA loans are specifically for rural home buyers and offer flexible credit and down payment requirements. Whichever loan program you ultimately choose, you should do your research and shop around to ensure you’re getting the best rate and loan terms available.
Mortgage on a $500,000 House Bottom Line
You can obtain a $500,000 mortgage from conventional lenders like banks or credit unions. If you don’t meet conventional loan requirements, FHA, VA, and USDA loans are alternative options with different eligibility criteria. Regardless of the loan program, it’s essential to research and compare rates and terms to find the best option for your situation.
Your monthly mortgage payment depends on factors like the down payment size and the interest rate offered by your lender. Assuming a 20% down payment ($100,000), you’d have a principal balance of $400,000. With an average mortgage rate of 5.4% for a 30-year fixed-rate loan, your monthly payment would be around $2250 without taxes and fees. You can create an amortization schedule to see how your payments are divided between principal and interest. As you consistently make payments toward the principal, the interest amount decreases until the balance is paid off completely.