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Instead of pursuing traditional home financing options, buyers might consider assuming the mortgage from the seller. FHA loans are assumable in certain scenarios for qualified buyers, and choosing that option may be beneficial for buyers and sellers alike. Here’s everything you need to know about how to assume a loan backed by the Federal Housing Administration (FHA), including the requirements and potential advantages and drawbacks.

What Is an FHA Loan?

An FHA loan is a type of mortgage that is popular with first-time homebuyers, in part due to its relaxed credit requirements. These loans are backed by the Federal Housing Administration (FHA), which reduces the risk for lenders and typically translates to lower interest rates than a conventional mortgage.

FHA mortgage loans carry low minimum down payment requirements: just 3.5% for borrowers with a credit score of at least 580, or 10% for borrowers with lower credit scores. On the other hand, FHA loans require borrowers to pay an FHA mortgage insurance premium (MIP) in addition to homeowner’s insurance. The home purchased with the FHA loan must be the buyer’s primary residence.

What Is Mortgage Assumption?

A mortgage assumption involves a buyer taking over the responsibility of a mortgage originally held by the seller to purchase a property. By assuming the mortgage, the buyer takes on the loan balance and terms on the home loan from the seller, and will begin making the same monthly payment as the seller had, based on the seller’s original interest rate. This makes an assumable mortgage an appealing option when current interest rates are high. Assuming a mortgage during divorce is also one way to divide assets and transfer property ownership between soon-to-be-former spouses.

Buyers must apply for an assumable mortgage from the lender that holds the original mortgage. As with other types of home mortgages, lenders will evaluate a borrower’s creditworthiness and other eligibility requirements.

It’s also possible to handle a mortgage assumption as a private transaction, known as a simple mortgage assumption. Essentially, the seller transfers the title to the buyer who agrees to manage the remaining mortgage payments. Keep in mind that this could leave the seller on the hook financially if the buyer misses mortgage payments.

Pros and Cons of Assuming an FHA Loan

Assuming an FHA loan can come with potential advantages and downsides. Here are some considerations for buyers and sellers to keep in mind if contemplating an FHA assumable mortgage.

Recommended: What Is a Good Mortgage Interest Rate Right Now?

FHA Loan Assumption Rules and Requirements

Are all FHA loans assumable? Put simply, no. There are requirements for the buyer, seller, and existing loan to qualify for an FHA assumable mortgage. For starters, the date the original loan was issued has an impact on how to assume an FHA loan. Following the passage of the HUD Reform Act of 1989, buyers need to meet FHA loan requirements to assume a FHA mortgage originated after December 15, 1989.

Typically, lenders look for a minimum credit score of 580 and a debt-to-income (DTI) ratio of 43% or less to qualify for a FHA loan. Those with a score of 500-579 may qualify but face more restrictions. The buyer must also use the property as their primary residence with an FHA loan assumption.

On the seller’s end, they need to have owned the home for at least one year. The current FHA loan must be in good standing, meaning that the seller has made on-time monthly payments.

How to Assume an FHA Loan

Follow the steps below to move forward with an FHA loan assumption.

1. Find a Seller With an Assumable Property

If you’re not assuming a property from a family member or someone you know, you might begin by contacting sellers directly. An FHA loan assumption could move faster than a standard mortgage process, so it could be favorable for some sellers.

2. Ensure You Meet the Eligibility Requirements

Getting your financial ducks in a row beforehand can help ensure you meet the eligibility requirements for an FHA loan assumption. Besides the minimum credit score and DTI ratio outlined above, lenders consider employment history and proof of income.

3. Submit an Assumption Application

Once you and the seller have reached an agreement, submit an application to the lender. You’ll need to compile bank statements and other financial information to include in the application.

4. Pay the Seller’s Equity

Instead of a down payment, the buyer is responsible for paying the seller for their home equity. This is calculated as the difference between the current loan balance and either the home’s purchase price or its current market value.

5. Finalize Closing

There are closing costs and paperwork to handle to finalize an FHA loan assumption. This includes signing a release of liability form that removes the seller from all future mortgage responsibility.

The Takeaway

FHA loans are assumable, and they present buyers with an option to secure a lower interest rate while taking on less debt. However, the upfront cost to buy out the seller’s home equity can be steep. If you haven’t found an assumable property or are still weighing your options, you might consider other types of financing to purchase a home.

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

Can anyone assume an FHA loan?

Anyone can assume an FHA loan if they meet the lender’s eligibility requirements. Lenders evaluate a buyer’s credit history and finances as if they were applying for a FHA loan.

Do you have to be a first-time buyer to assume an FHA loan?

You do not have to be a first-time homebuyer to assume an FHA loan. But buyers do need to use the home as their primary residence when assuming an FHA loan.

What credit score do you need to assume an FHA loan?

Generally, buyers need a credit score of 580 or higher to assume an FHA loan. It may be possible to qualify with a credit score between 500 and 579 but with more money down.

Can you avoid mortgage insurance when assuming an FHA loan?

A mortgage insurance premium is required on FHA loans, though it’s possible to assume an FHA loan that had the mortgage insurance premium cancelled if the seller met certain criteria.

Does the original borrower get released from liability when an FHA loan is assumed?

Yes, the original borrower gets released from liability when the release of liability form is signed at the closing for an FHA loan assumption. In a private assumption transaction, if there is no release of liability signed, the original borrower could remain responsible for payments should the new owner default.

Photo credit: iStock/ Rawpixel

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q425-060

It’s entirely possible to sell a house with a mortgage. In fact, it’s common to sell a property that still has a mortgage, because most people don’t stay in a home long enough to pay off the home loan.

With the help of your lender and real estate agent, you can move ahead and sell a house with a mortgage. Yes, there’s a bit of paperwork involved, but settling your mortgage at the closing table shouldn’t prove too challenging. Here’s everything you need to know about selling a home with a mortgage.

What Happens to Your Mortgage When You Sell Your Home?

When you sell your home, the amount you contracted with the buyer is put toward your mortgage and settlement costs before any excess funds are wired to you. Here’s how it works for different transaction types.

A Typical Sale

In a typical sale, homeowners will put their current home on the market before buying another one. Assuming the homeowners have more value in their home than what is owed on their mortgage, they can take the proceeds from the sale of the home and apply that money to the purchase of a new home.

A Short Sale

A short sale is one when you cannot sell the home for what you owe on the mortgage and need to ask the lender to cover the difference (or short).

In a short sale transaction, the mortgage lender and servicer must accept the buyer’s offer before an escrow account can be opened for the sale of the property. This type of mortgage relief transaction can be lengthy (up to 120 days) and involves a lot of paperwork. It’s not common in areas where values are falling or at times when the real estate market is dropping.

When You Buy Another House

There are several roads you can take when you buy another house before selling your own. You may have the option of:

•   Holding two mortgages. If your lender approves you for a new mortgage without selling your current home, you may be able to use this option when shopping for a mortgage. However, you won’t be able to use funds from the sale of your current home for the purchase of your next home.

•   Including a home sale contingency in your real estate contract. The home sale contingency states that the purchase of the new home depends upon the sale of the old home. In other words, the contract is not binding unless you find a buyer to purchase the old home. The two transactions are often tied together. When the sale of the old home closes, it can immediately fund the down payment and closing costs of the new home (depending on how much there is, of course). Keep in mind that a home sale contingency can make your offer less competitive in a hot real estate market where sellers are not willing to wait around for a buyer’s home to sell.

•   Getting a bridge loan. A bridge loan is a short-term loan used to fund the costs of obtaining a new home before selling the old home. The interest rates are usually pretty high, but most homebuyers don’t plan to hold the loan for long.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Selling a House With a Mortgage: Step by Step

Here are the steps to take to sell a home that still has a mortgage.

Get a Payoff Quote

To determine exactly how much of the mortgage you still owe, you’ll need a payoff quote from your mortgage servicer. This is not the same thing as the balance shown on your last mortgage statement. The payoff amount will include any interest still owed until the day your loan is paid off, as well as any fees you may owe.

The payoff quote will have an expiration date. If the outstanding mortgage balance is paid off before that date, the amount on the payoff quote is valid. If it is paid after, sellers will need to obtain a new payoff quote.

Determine Your Home Equity

Equity is the difference between what your property is worth and what you owe on your mortgage (your payoff quote is most accurate). If your home is worth $400,000 and your payoff amount on the existing mortgage is $250,000, your equity is $150,000.

When you sell your home, you gain access to this equity. Your mortgage, any second mortgage like a home equity loan, and closing costs are settled, and then you are wired the excess amount to use how you like. Many homeowners opt to use part or all of the money as a down payment on their next home.

Secure a Real Estate Agent

A real estate agent can walk you through the process of selling a home with a mortgage and clear up questions on other mortgage basics. Your agent will be particularly valuable if you need to buy a new home before selling your current home.

Set a Price

With your agent, you will look at factors that affect property value, such as comparable sales in your area, to help you set a price. There are different price strategies you can review with your agent to bring in more buyers to bid on your home.

Accept a Bid and Open Escrow

After an open house and showings, you may have an offer (or a handful). Consider what you value in accepting an offer. Do you want a fast close? The highest price? A buyer who is flexible with your moving date? A buyer with mortgage preapproval?

You may also choose to continue negotiating with prospective buyers. Once you’ve selected a buyer and have signed the contract, it’s time to go into escrow.

Review Your Settlement Statement

You’ll be in escrow until the day your transaction closes. An escrow or title agent is the intermediary between you and the buyer until the deal is done. While the loan is being processed, title reports are prepared, inspections are held, and other details to close the deal are being worked out.

Three days before, you’ll see a closing disclosure (if you’re buying a house at the same time) and a settlement statement. The settlement statement outlines fees and charges of the real estate transaction and pinpoints how much money you’ll net by selling your home.

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

Selling a House With a Negative Equity

Negative equity means that the value of an asset (such as a home) is less than the balance due on the loan against it. Say you purchased a property for $400,000 with a $380,000 loan, but then the real estate market took a nosedive. Your property is now worth $350,000, less than the amount of the mortgage.

If you have negative equity in the home and need to sell it, it is possible to sell if you come up with the difference yourself.

In this scenario (an alternative to a short sale), you pay the difference between the amount left on your mortgage note and the purchase offer at closing. So in the example above, if you sold the house for $350,000, at the closing, you would need to pay the loan holder an additional $30,000 to clear the debt.

The Takeaway

Selling a house with a mortgage is common. The buyer pays the sales price, and that money is used to pay off your remaining mortgage, your closing costs, and any second mortgage. The rest is your profit to spend however you like — perhaps on a new house.

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

Who is responsible for the mortgage on the house during the sale?

The homeowner is responsible for continuing to pay the mortgage until paperwork is signed on closing day.

What happens if you sell a house with a HELOC?

When you sell a home that is used to secure a home equity line of credit with a balance, a home equity loan, or any other kind of lien against the house, that will need to be paid off before the remaining equity is paid out to you.

What happens to escrow money when you sell your house?

Your mortgage escrow account will be closed, and any money left will be refunded to you.

Can I make a profit on a house I still owe on?

Yes. You can make a profit if the amount you sell your house for is greater than the amount you owe on it, less closing and settlement costs.

Can I have two mortgages at once?

Yes, you can have two mortgages at once if the lender approves it.

Photo credit: iStock/Beton studio

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q425-193

The total cost of a mortgage depends on the loan term and the interest rate. For a $250,000 mortgage with a 30-year term and 6.25% interest rate, borrowers can expect a monthly mortgage payment around $1,539 a month.

However, there are other mortgage costs to consider — both at closing and over the life of the loan. Here’s a look at the factors that affect how much your mortgage costs, as well as what you can expect to pay for a $250,000 mortgage.

Cost of a $250,000 Mortgage

The cost of a $250,000 mortgage is more than just the borrowed amount, known as the loan principal. While borrowers repay the principal, they are also required to pay interest, calculated as a percentage of the loan amount, to cover the cost of issuing the loan. A percentage point difference in interest rate could bump up a $250,000 mortgage payment by $100 or more a month, significantly increasing the total interest paid over the life of the loan.

Most mortgages require a down payment, with the exception of VA loans and USDA loans. The minimum down payment depends on the type of loan and a borrower’s financial situation. For example, the required down payment on a FHA loan is 3.5% for borrowers with credit scores of at least 580 versus 10% for borrowers with credit scores between 500 and 579.

The down payment amount also impacts the total cost of home mortgage loans. Homeowners will be on the hook for paying private mortgage insurance (PMI) with their monthly payments unless they put 20% or more down. PMI is usually 0.5% to 1.5% of the loan principal per year, spread across monthly mortgage payments.

Buying a house also involves closing costs, typically ranging from 3% to 6% of the loan principal. For a $250,000 mortgage, closing costs would likely be between $7,500 and $15,000. If saving up for both the down payment and closing proves to be a challenge, buyers might explore down payment assistance programs.

Recommended: Best Affordable Places to Live in the U.S.

Monthly Payments for a $250,000 Mortgage

Figuring out how much you can afford to spend on housing each month is an essential step to determining your homebuying budget. Monthly mortgage payments typically include four components: loan principal, interest, taxes, and insurance.

Assuming a 30-year fixed term and an interest rate of 6.25%, a $250,000 mortgage monthly payment would amount to $1,539 for the loan principal and interest, as noted above. Choosing a 15-year loan term with a 6.25% interest rate would translate to a monthly mortgage payment of $2,144. Note that these figures do not include property taxes and insurance. Taxes vary according to your property’s assessed value, as well as by location — so the cost of living by state is another factor buyers must consider.

Initially, the majority of the monthly mortgage payment goes toward interest rather than paying off the loan principal. Over time, a greater share of the mortgage payment is applied to the principal balance, helping build equity in your home.

For a more detailed look at what a $250,000 mortgage payment amounts to, using a mortgage calculator or home affordability calculator lets you experiment with different down payments, interest rates, and loan terms.

💡 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.

Where to Get a $250,000 Mortgage

The majority of U.S. homebuyers use a mortgage loan to finance their home purchase. Buyers can get a $250,000 mortgage from a variety of lenders, including banks, credit unions, mortgage brokers, and online lenders. Shopping around and looking at multiple lenders is recommended to help secure a lower interest rate and save thousands over the life of a mortgage. Besides the interest rate, examine the differences in fees, mortgage points, and expected closing costs when comparing lenders.

There are also different types of mortgage loans to consider. Your mortgage loan options depend in part on your location, veteran status, down payment size, and whether you qualify as a first-time homebuyer. For comparison, here’s the mortgage amortization schedule on a 30-year mortgage vs. a 15-year loan. In both cases we are assuming a $250,000 mortgage with a 7% fixed rate. Looking at a $250,000 mortgage payment 30 years’ out, borrowers would pay $194,284 more in interest payments than with a 15-year term.

Amortization schedule, 30-year mortgage at 7%

Amortization schedule, 15-year mortgage at 7%

Recommended: Home Loan Help Center

How to Get a $250,000 Mortgage

If the estimated monthly payments above fit your budget, proceed with the following steps to get a $250,000 mortgage. First, take stock of your financial situation and read up on tips to qualify for a mortgage before applying. Start by checking your credit score, calculating your debt-to-income (DTI) ratio, and evaluating your available savings for a down payment and closing costs. Lenders consider all these factors when reviewing a loan application. Ahead of time, prepare the documents you’ll need for the mortgage application, including bank statements, tax returns, and W-2s.

After comparing lenders and loan types, getting preapproved for a home loan is a logical next step. Mortgage preapproval from a lender shows the loan amount and interest rate you qualify for, helping inform your budget and demonstrate that you’re a serious buyer when putting in an offer on a property.

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

The Takeaway

The cost of taking out a $250,000 mortgage depends on the interest rate and loan term. A monthly $250,000 mortgage payment often will also include taxes and insurance. To get a $250,000 mortgage, borrowers need to factor a down payment and closing costs into their homebuying budget.

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 $250K mortgage a month?

The payment on a $250,000 mortgage with a 6.50% interest rate would be $1,580 a month for a 30-year term and $2,178 a month for a 15-year term. The down payment amount, property taxes, and insurance costs also impact the monthly mortgage payment.

How much income is required for a $250,000 mortgage?

The required income for a $250,000 mortgage depends on several factors, including existing debt, down payment size, and interest rate. With a 20% down payment and 7% interest rate, an income of $77,710 or more would qualify for a $250,000 mortgage, provided you don’t have a lot of debt already.

How much is a down payment on a $250,000 mortgage?

The required down payment on $250,000 mortgages depends on the loan type and lender. FHA loans require down payments of 3.5% or 10%, while some buyers could qualify for a conventional loan with as little as 3% down.

Can I afford a $250K house with a $70K salary?

You may be able to afford a $250,000 house with a $70,000 salary. Besides income, how much house you can afford depends on how much you are prepared to pay for a down payment and what your debt-to-income ratio is.

Photo credit: iStock/Antonio_Diaz

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q425-186

A $200,000 mortgage might cost you more than twice that amount over the course of the loan’s lifetime. That’s thanks in part to the way banks amortize, or parse out the balance of interest to principal in each payment. Of course, how much your specific $200,000 mortgage will cost is a more complicated equation, since personal financial factors like your credit score and debt level will affect your interest rate. And your interest rate, in turn, will affect your total mortgage cost.

Let’s take a deeper dive into the mortgage payment on $200K, including sample amortization tables, how much your monthly payment might cost, where to find a loan, and more.

Here’s What a $200,000 Mortgage Costs

When you take out a loan of any kind, the lending institution — often a bank — charges you for the service of giving you the money you need up front. When you repay a loan, you’re repaying both principal (the money you borrowed) and interest (the money the loan servicer is charging you).

Interest is expressed as a rate in the form of a percentage. Higher interest means you’re paying more for the loan — and lower interest, of course, means you’ll pay less. The lowest interest rates are reserved for buyers with the best financial profiles, which may include factors like robust and steady income, a good or excellent credit score, and a low level of existing debt (another factor lenders express in the form of a percentage: DTI, or your debt-to-income ratio).

With all that said, let’s say you take out a $200,000 mortgage to pay for a house that costs $275,000. In this example, you’d have made a down payment of $75,000, or just over 27%. Over the course of a 30-year mortgage term, with a fixed interest rate of 6%, you’d pay almost $232,000 in interest — along with the principal repayment, of course, bringing your total amount paid to almost $432,000. You’ll notice that figure is more than double the original $200,000 you borrowed, and this example doesn’t even include additional fees like property tax or homeowners insurance.

However, interest rates are very powerful here, and even a small decrease in interest can have a big effect on the overall loan cost. For example, imagine everything we’ve just described above remains the same, but your interest rate is 4% rather than 6%. In that scenario, your total interest would be about $143,000, representing a savings of around $90,000. (Insert shocked emoji.)

As you can see, finding the most favorable interest rates possible is really worthwhile for homebuyers. If this is your first time in the home market, a home loan help center can educate you about the buying process.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

How Much Are Monthly Payments for a $200,000 Mortgage?

Maybe you’re less concerned about how much your $200,000 mortgage will cost you over the long term but are curious about the monthly payment on a $200K mortgage. Again, interest rates have a big effect on monthly mortgage payments, as does the loan’s term (how long you have to repay it). Still, we can offer a few examples.

For a 30-year $200,000 mortgage at a fixed interest rate of 7%, your monthly payments would be about $1,330 (though this figure doesn’t include property taxes or homeowners insurance, which could push your payment hundreds of dollars upward).

For a 15-year $200,000 mortgage with the same interest rate, your monthly payments would be about $1,797 (again, without additional costs included).

You can get more specific figures customized to your circumstances using a mortgage calculator or home affordability calculator online.

Where You Can Get a $200,000 Mortgage

There are ways to get a $200,000 mortgage if you’re sure you’re ready for one. Private banks, credit unions, and lenders who specialize in mortgages are all available to meet your request. You can usually do most of the application online.

One caveat: As we’ve seen above, interest rates can make a huge difference when it comes to the cost of your mortgage over time. Although market factors have a big influence on interest rates, your personal markers also matter. Getting your financial ducks in a row as possible before applying could help you save money in the long run. (So can finding an affordable place to live in the first place.) Additionally, you may want to ask for prequalification quotes from a variety of lenders to see who can give you the best deal.

Recommended: Tips to Qualify for a Mortgage

What to Consider Before Getting a $200,000 Mortgage: Amortization

Remember how we were talking about amortization above? In most cases, lenders amortize loans in such a way that, toward the beginning of the loan, the bulk of your payments are going to cover interest. (Although your fixed monthly payments never change, the proportion of how much of that amount goes toward interest versus principal can.)

To understand how this can impact your ability to build equity, we’ve included the following sample amortization schedules for two different types of mortgage loans below. As you’ll see, the remaining principal balance goes down far more slowly than the amount you pay in. For example, in the chart below, although you’d pay a total of almost $16,000 toward your mortgage, the principal only reduces by about $2,000 because nearly $14,000 of your payments go toward interest.

Amortization Schedule, 30-year, 7% Fixed

As you can see, even 20 years into the loan’s 30-year lifespan, you’ll still be paying more toward interest than principal (though the proportion will be much closer to 50/50 than at the beginning of the term).

Next, let’s look at what happens when the home mortgage loan term is reduced to 15 years.

Amortization Schedule, 15-year, 7% Fixed

As this chart shows, a mortgage loan with a shorter term can help you build equity more quickly: Notice how principal and interest payments are much closer to equal just five years in, or a third of the way through the loan. Keep in mind that this ability comes at the cost of a higher monthly payment, though, so it may not be possible for all — especially first-time homebuyers who may struggle to meet higher mortgage payments.

💡 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 Do I Get a $200,000 Mortgage?

Taking out a $200,000 mortgage is a fairly simple process these days. In most cases, your lender can prequalify you online or over the phone. While applying for your official approval will take a few more steps, including providing documentation like income verification and tax returns, you can still be approved in as little as a business day — and ready to take over the keys to your dream home.

To get started, reach out to the lender you’ve chosen to learn more about its process. The lender may make it simple to start your application online. Just don’t forget that interest adds up, and amortization can make it more difficult to build equity quickly. It’s worth checking in to ensure your lender doesn’t charge an early repayment penalty, and that it’s easy to pay additional principal if you’re able.

Recommended: The Cost of Living By State

The Takeaway

Because of interest, a $200,000 mortgage might cost more than $200,000 on top of the principal you borrow. It all depends on your loan term as well as your specific rate — which in turn depends on your financial standing.

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 does a $200K mortgage cost each month?

With a fixed rate of 6.25%, a 30-year $200,000 mortgage will cost about $1,231 per month before additional fees, and a 15-year $200,000 mortgage at the same rate will cost closer to $1,715. If your down payment is less than 20% you will likely have to pay for mortgage insurance as well, not to mention property taxes and insurance.

How much income is required to qualify for a $200,000 mortgage?

An income of around $65,000 is in the right ballpark to qualify for a $200,000 mortgage. Income is far from the only important factor lenders consider when qualifying you for a loan, however, and even those who make substantial income may not qualify if they have high levels of debt or other negative factors.

How much is the down payment for a $200,000 mortgage?

Down payment amounts can vary substantially. Some loans allow you to put down as little as 3.5%, which, for a $200,000 home would be $7,000. To avoid having to pay for mortgage insurance, you’d want to put down at least 20%, which is $40,000.

Can I afford a $200K house with a salary of $70K?

What you can and can’t afford is a complex calculation that depends on your lifestyle, where you live, and more. That said, a salary of $70,000 is within the feasible range to take out a $200,000 mortgage, particularly if you choose a longer loan term.

Photo credit: iStock/skynesher

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q425-181

Monthly payments on a $100,000 mortgage could range from $600 to around $1,000, depending on the loan’s interest rate, term, and other factors. But it’s also important to think about how much borrowing $100,000 will cost you over time, and to pay attention to all your costs as you move forward with your home purchase. Some costs may be negotiable, and a little comparison shopping could help you save. Read on for a breakdown of what the costs related to borrowing $100,000 might be.

What Will a $100,000 Mortgage Cost?

There are several different expenses you can expect to encounter when taking out a mortgage. Most of the time, they can be divided into three main categories.

Closing Costs

Closing costs, which you’ll pay upfront, typically include loan processing fees, third-party services such as appraisals and title insurance, and government fees and taxes. You also may choose to pay mortgage points (also known as discount points) on your loan to lower the interest rate. Closing costs can vary significantly, but they generally range from 3% to 6% of the loan amount.

Monthly Payments

Monthly mortgage payments, which are paid over the life of your loan, usually include two primary components:

•   Principal: This is the portion of your mortgage payment that goes directly toward paying back the amount you borrowed.

•   Interest: This is the amount the lender charges 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, factored into their closing costs and/or monthly payments. Lenders often collect and hold money in an escrow account to ensure critical bills like homeowners insurance and property taxes are paid on time.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

What Would the Monthly Payment Be for a $100,000 Mortgage

We’ll keep things simple and eliminate the costs associated with an escrow account to get an idea of what a $100,000 mortgage payment might look like each month.

Let’s say you wanted to purchase a home for $120,000, and you had $20,000 for a down payment. If your lender offered you a 7.00% interest rate on a 15-year loan for $100,000, you could expect your monthly payment — principal and interest — to be about $898. If you had a 30-year loan at the same rate, a $100,000 mortgage payment could be about $665 per month.

Here are some more examples that show the difference between a 15-year loan vs. a 30-year loan, using a mortgage calculator:

How Much Interest Will You Pay on a $100,000 Mortgage?

The interest rate your lender offers can make a big difference in the overall cost of your mortgage. So can the mortgage term you choose. On a $100,000 mortgage at a 7.00% rate, for example, your total interest costs could range from $61,789 to $139,509, depending on the length of the loan you choose (15 vs. 30 years).

Stretching your mortgage payments over a longer term can lower your monthly payment, but you can expect to pay more for the loan overall. If you start out with a 30-year term and find your budget can handle larger payments, you can always consider a mortgage refinance or a recast to adjust your payment amount and schedule.

Recommended: Best Affordable Places to Live in the U.S.

How Does Amortization Work on a $100,000 Mortgage?

Though your payment will remain the same every month (if you have a fixed-rate loan, you can expect the amount you’ll pay each month toward interest vs. principal to 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 should provide you with a repayment schedule, or mortgage amortization schedule, that shows you how the proportions will change over the length of your loan.

Here’s what the amortization schedules for a $100,000 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 7.00%

Amortization Schedule, 15-Year Loan at 7% APR

Where Can You Get a $100,000 Mortgage?

Homebuyers have options when they’re deciding where to go for a loan, including online banks and lenders, traditional banks, and credit unions. Because lenders’ rates and terms may vary, it can be a good idea to shop around for a mortgage that’s a good fit for your needs and goals.

Before you start getting mortgage estimates, you may want to sit down and figure out the different types of mortgages you’re interested in and what you might qualify for. Would you be better off with a conventional mortgage or a government-backed loan? Are you looking for a fixed or adjustable mortgage rate? Do you want a 15-, 20-, or 30-year mortgage? Some lenders specialize in certain kinds of loans, such as government-backed loans. And some loans may have less stringent standards for down payment amounts or a borrower’s credit score. Once you start comparison shopping, you may want to read some online reviews of the lenders you’re considering.

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

How to Get a $100,000 Mortgage

Feeling a little overwhelmed by the whole home-buying and mortgage process? Breaking it down into a few manageable steps may make things a little less daunting. If you’ve never bought a home before, spend some time studying up with a first-time homebuyer guide.

First, Figure Out What You Can Afford

Looking at 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 determine how much of a down payment you can handle and how much house you can afford.

Look at 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.

Get Preapproved

After 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 can come in handy in a bidding war.)

Time to Go House Hunting

Once you’ve done your homework, you can search for and 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

When you’re ready to seal the deal, be prepared to give your lender more financial information and documentation for a formal loan application.

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.

How Much House Can You Afford Quiz

Recommended: Home Loan Help Center

The Takeaway

Researching the different expenses you might have to pay when taking out a $100,000 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 affect how much you pay every month — and over the length of the 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 $100,000 mortgage a month?

The monthly payment for a $100,000 mortgage could range from $600 to around $1,000, depending on several factors, including the interest rate and loan term.

How much income is required for a $100,000 mortgage?

You’ll probably need to earn around $40,000 a year (before taxes) to get a $100,000 mortgage. But lenders will look at several factors, besides your income, to determine if you can afford a $100,000 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 $100,000 mortgage?

If you wanted to make a 20% down payment (thereby avoiding paying for mortgage insurance), you would put down around $25,000 on a $100,000 mortgage. But a down payment could be as low as 3% in some cases (around $4,000), and may vary depending on the price of the house you choose and the type of loan you get.

Can I afford a $100,000 mortgage with a $70,000 salary?

As long as all your monthly debt payments combined — including your house payment, credit cards, student loans, and car payments — are less than $2,100, you may be able to afford a $100,000 mortgage on a $70,000 salary.

Photo credit: iStock/Hispanolistic

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