The monthly payments on a $400,000 mortgage could range from about $2,300 to more than $3,700, depending on the loan’s interest rate, term, and other factors. But hopeful homebuyers would be wise to consider how much that mortgage could cost over time as well as what the monthly payments might be. Read on for a breakdown of what some of your home-buying costs might be, and how they could affect the total cost of a $400,000 mortgage.
What Will a $400,000 Mortgage Cost?
There are several different costs you may run into when taking out a mortgage. Most of the time, they can be divided into three main categories.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Closing Costs
Closing costs are expenses you’ll pay upfront when you get a loan. They can include things like loan processing fees, third-party services such as appraisals and title insurance, and government fees and taxes. You also may decide to pay mortgage points (also called discount points) upfront on your loan to lower the interest rate. Closing costs can vary significantly from one loan type and lender to the next, but they generally range from 3% to 6% of the mortgage amount.
Monthly Payments
Monthly mortgage payments, which are paid over the life of your loan, typically include two main parts:
• Principal: This portion of your mortgage payment goes directly toward paying back the amount you borrowed.
• Interest: This is the fee the lender will charge you for borrowing money. The amount of interest you pay each month will be calculated by multiplying your interest rate by your remaining loan balance.
Escrow
Some homebuyers may also have a third amount, called escrow, included in their closing costs and/or monthly payments. Lenders often collect and hold money in an escrow account so they can be sure critical bills like homeowners insurance and property taxes are paid on time. (Curious about the most budget-friendly places to buy? Check out this list of the most affordable cities in each state.)
💡 Quick Tip: SoFi’s Lock and Look + feature allows you to lock in a low mortgage financing rate for 90 days while you search for the perfect place to call home.
What Would the Payment Be on a $400,000 Mortgage?
We’ll keep things simple and eliminate the costs associated with an escrow account to calculate what the payment on a $400,000 mortgage’s monthly payments might be.
Let’s say you wanted to purchase a home for $500,000, and you had $100,000 for a down payment. If your lender offered you a 7% annual percentage rate (APR) on a 15-year loan for $400,000, you could expect your monthly payment — principal and interest — to be about $3,595. If you had a 30-year loan with a 7% APR, your payment could be about $2,661.
Here are some more examples that show the difference between a 15-year loan vs. a 30-year loan, using SoFi’s Mortgage Calculator:
| APR | Payment with 15-year Loan | Payment with 30-year Loan |
|---|---|---|
| 5.5% | $3,268 | $2,271 |
| 6.5% | $3,484 | $2,528 |
| 7.5% | $3,708 | $2,796 |
Where Can You Get a $400,000 Mortgage?
Homebuyers may have a few different options when deciding where to go for a mortgage, including online banks and lenders, and traditional banks and credit unions. Because the rates and terms lenders offer may vary, it can be a good idea to shop around for a mortgage that’s the right fit for your individual needs.
Before you start looking for quotes, though, you may want to sit down and review the different types of mortgages you can qualify for. How would a 15-, 20-, or 30-year mortgage affect your monthly payments? Are you looking for a fixed or adjustable mortgage rate? Would you be better off with a conventional mortgage or a government-backed loan? (Some loans may have more flexible requirements for down payment amounts or a borrower’s credit score.)
Once you start comparison shopping, you can note the pros and cons of various offers and narrow down your choices. You also may want to read some online reviews of the lenders you’re considering.
Recommended: 2024 Home Loan Help Center
How Much Interest Will You Pay on a $400,000 Mortgage?
The interest rate your lender offers can make a big difference to the overall cost of your mortgage. So can the mortgage term you choose.
On a $400,000 mortgage at a 7% APR, for example, your total interest costs could range from $247,156 to $558,036, depending on the length of the loan you choose (15 vs. 30 years).
Spreading out your mortgage payments over a longer term can lower your monthly payment, but you can expect to pay more for the loan overall. Your financial circumstances at the time you take out your loan may dictate which is a priority for you. (If you go for a longer loan, and your situation changes, you may decide to refinance your home mortgage to a shorter term down the road.)
💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.
How Does Amortization Work on a $400,000 Mortgage?
Though your payment will remain the same every month (if you have a fixed-rate loan), the amount you’ll pay toward interest vs. principal will change over the life of your home loan. In the first years, the majority of your payment will go toward interest. But as your balance goes down, more of your payment will go toward principal.
Your lender can provide you with a mortgage amortization schedule that shows you how the proportions will change as you make payments on your loan.
Here’s what the amortization schedules for a $400,000 mortgage with 30- and 15-year terms might look like. (Keep in mind that your payments may include other costs besides principal and interest.)
Amortization Schedule, 30-Year Loan at 7% APR
| Year | Amount Paid | Interest Paid | Principal Paid | Remaining Balance |
|---|---|---|---|---|
| 1 | $31,934.52 | $27,871.28 | $4,063.24 | $395,936.76 |
| 2 | $31,934.52 | $27,577.55 | $4,356.97 | $391,579.79 |
| 3 | $31,934.52 | $27,262.58 | $4,671.94 | $386,907.85 |
| 4 | $31,934.52 | $26,924.85 | $5,009.67 | $381,898.18 | 5 | $31,934.52 | $26,562.70 | $5,371.82 | $376,526.36 |
| 6 | $31,934.52 | $26,174.37 | $5,760.15 | $370,766.21 |
| 7 | $31,934.52 | $25,757.97 | $6,176.55 | $364,589.66 |
| 8 | $31,934.52 | $25,311.46 | $6,623.06 | $357,966.60 |
| 9 | $31,934.52 | $24,832.68 | $7,101.84 | $350,864.76 | 10 | $31,934.52 | $24,319.29 | $7,615.23 | $343,249.53 |
| 11 | $31,934.52 | $23,768.78 | $8,165.74 | $335,083.80 |
| 12 | $31,934.52 | $23,178.48 | $8,756.04 | $326,327.76 |
| 13 | $31,934.52 | $22,545.51 | $9,389.01 | $316.938.75 |
| 14 | $31,934.52 | $21,866.78 | $10,067.74 | $306,871.01 | 15 | $31,934.52 | $21,138.98 | $10,795.54 | $296,075.46 |
| 16 | $31,934.52 | $20,358.57 | $11,575.95 | $284,499.51 |
| 17 | $31,934.52 | $19,521.74 | $12,412.78 | $272,086.73 |
| 18 | $31,934.52 | $18,624.42 | $13,310.10 | $258,776.63 |
| 19 | $31,934.52 | $17,662.23 | $14,272.29 | $244,504.35 | 20 | $31,934.52 | $16,630.49 | $15,304.03 | $229,200.31 |
| 21 | $31,934.52 | $15,524.16 | $16,410.36 | $212,789.95 |
| 22 | $31,934.52 | $14,337.85 | $17,596.67 | $195,193.28 |
| 23 | $31,934.52 | $13,065.79 | $18,868.73 | $176,324.55 |
| 24 | $31,934.52 | $11,701.76 | $20,232.76 | $156,091.79 | 25 | $31,934.52 | $10,239.14 | $21,695.38 | $134,396.41 |
| 26 | $31,934.52 | $8,670.78 | $23,263.74 | $111,132.66 |
| 27 | $31,934.52 | $6,989.04 | $24,945.48 | $86,187.18 |
| 28 | $31,934.52 | $5,185.73 | $26,748.79 | $59,438.39 |
| 29 | $31,934.52 | $3,252.05 | $28,682.47 | $30,755.92 | 30 | $31,934.52 | $30,755.92 | $1,178.60 | $0 |
Amortization Schedule, 15-Year Loan at 7% APR
| Year | Amount Paid | Interest Paid | Principal Paid | Remaining Balance |
|---|---|---|---|---|
| 1 | $43,143.76 | $27,504.57 | $15,639.19 | $384,360.81 |
| 2 | $43,143.76 | $26,374.01 | $16,769.75 | $367,591.06 |
| 3 | $43,143.76 | $25,161.72 | $17,982.04 | $349,609.02 |
| 4 | $43,143.76 | $23,861.80 | $19,281.96 | $330,327.06 | 5 | $43,143.76 | $22,467.90 | $20,675.85 | $309,651.21 |
| 6 | $43,143.76 | $20,973.24 | $22,170.51 | $287,480.69 |
| 7 | $43,143.76 | $19,370.54 | $23,773.22 | $263,707.47 |
| 8 | $43,143.76 | $17,651.97 | $25,491.79 | $238,215.68 |
| 9 | $43,143.76 | $15,809.16 | $27,334.59 | $210,881.09 | 10 | $43,143.76 | $13,833.14 | $29,310.61 | $181,570.48 |
| 11 | $43,143.76 | $11,714.28 | $31,429.48 | $150,141.00 |
| 12 | $43,143.76 | $9,442.24 | $33,701.52 | $116,439.48 |
| 13 | $43,143.76 | $7,005.95 | $36,137.80 | $80,301.67 |
| 14 | $43,143.76 | $4,393.55 | $38,750.21 | $41,551.47 | 15 | $43,143.76 | $1,592.29 | $41,551.47 | $0 |
How to Get a $400,000 Mortgage
If you’re feeling intimidated by the whole home-buying process, breaking it down into some manageable steps may make things a little less overwhelming.
First, Determine What You Can Afford
Reviewing your income, debts, monthly spending, and how much you’ve saved for a down payment can be a good place to start. This will help you decide how much of a down payment you can handle and how much house you can afford.
Compare Different Loans and Lenders
Once you know what you can afford, you can start looking for the loan type, interest rate, loan term, and lender that meet your needs.
Consider Getting Preapproved
If you’ve decided on a loan and lender, it can be a good idea to go through the preapproval process. Getting a letter from your lender that says you’re preapproved for a certain loan amount lets sellers know you’re a serious buyer. (And it can come in handy if you get into a bidding war for your dream home.)
Get Ready to Go House Hunting
When you have your loan lined up, you can look for and potentially make an offer on a house. And since you already know how much you can afford, you can target homes in that range.
Submit a Full Mortgage Application
Once your offer is accepted and you’re ready to move forward, your lender will ask you to complete a more formal loan application and provide additional financial information and documentation.
Prepare for Closing
While you’re waiting for a final loan approval and a closing date, you can shop for homeowners insurance, get a home inspection, and make sure you have all the money you need for your down payment and closing costs.
Take Ownership of Your New Home
At the closing you can sign all the necessary paperwork, hand over the funds needed to make the purchase, and — congratulations! — get the keys to your new home.
Recommended: First-Time Homebuyer Guide
The Takeaway
Researching the different costs you might have to pay if you plan to take out a $400,000 mortgage can help you stick to your budget and avoid unpleasant surprises.
The choices you make about the type of loan you get, the interest rate, loan term, and other costs, will all play part in how much you pay every month — and over the length of the loan. So it can be a good idea to run the numbers before you decide on a particular lender or loan.
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.
FAQ
How much is a $400,000 mortgage a month?
The monthly payment for a $400,000 mortgage could range from about $2,300 to more than $3,700, depending on several factors, including the interest rate and loan term.
How much income is required for a $400,000 mortgage?
Lenders will look at several factors besides your income to determine if you can afford a $400,000 mortgage. You can expect to be asked about your debt, credit history, assets, and the down payment you plan to make.
How much is a down payment on a $400,000 mortgage?
Your down payment may vary depending on the price of the house you choose, the type of loan you get, and if you want to avoid paying private mortgage insurance as part of your borrowing costs. Traditionally, lenders like to see a 20% down payment, which on a $500,000 home would be a $100,000 down payment and a $400,000 mortgage. But many lenders accept lower down payments.
Can I afford a $400,000 mortgage with a $70,000 salary?
Since your housing costs (monthly payments, insurance, etc.) would likely be more than half your monthly salary, it could be a challenge to afford a $400,000 mortgage on a $70,000 salary.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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