Key takeaways
- A 30-year mortgage on a $1M home prices between $6,700–$8,200 per 30 days
- Over 30 years, chances are you’ll pay over $1M in curiosity at at the moment’s charges
- Elements like mortgage length, rate of interest, and down cost closely affect your month-to-month mortgage funds
Not way back, one million {dollars} might need felt like a fortune. Nevertheless, in at the moment’s housing market, it’s frequent to seek out listings for houses that fall into that seven-figure vary, particularly in high-cost cities like Boston and San Francisco. However what does a $1M dwelling actually price when it comes to your month-to-month mortgage payment? Let’s break it down.
What’s included in a $1M mortgage cost?
Your mortgage cost is extra than simply paying again the mortgage. Right here’s what’s usually included:
- Principal and curiosity: The quantity borrowed plus the curiosity charged by your lender
- Personal mortgage insurance coverage (PMI): Wanted for those who put lower than 20% down
- Property taxes: Set by your native authorities and differ based mostly on location
- Owners insurance coverage: Protects your property in opposition to harm and legal responsibility
How a lot you pay each month is set by your rate of interest, mortgage sort, and down cost measurement. Within the tables beneath, we’ll break down what the estimated month-to-month mortgage funds for a $1 million dwelling appear like based mostly on how a lot cash you set down upfront.
Instance month-to-month funds for a $1M dwelling
These estimates embody the primary parts of a mortgage cost: principal, curiosity, and common further prices like taxes and insurance coverage. Property taxes and insurance coverage differ by location, so precise month-to-month prices might differ.
30-year mortgage at 6.875% curiosity
| Down cost | Mortgage quantity | Month-to-month cost (principal + curiosity) | Estimated whole cost (together with taxes + insurance coverage) |
| 20% ($200K) | $800,000 | $5,255 | $6,697 |
| 10% ($100K) | $900,000 | $5,912 | $7,917 |
| 5% ($50K) | $950,000 | $6,241 | $8,276 |
15-year mortgage at 5.99% curiosity
| Down cost | Mortgage quantity | Month-to-month cost (principal + curiosity) | Estimated whole cost (together with taxes + insurance coverage) |
| 20% ($200K) | $800,000 | $6,747 | $8,188 |
| 10% ($100K) | $900,000 | $7,590 | $9,594 |
| 5% ($50K) | $950,000 | $8,012 | $10,047 |
Notice: Many lenders require at the least 20% down for jumbo loans, so the 5% and 10% eventualities might not at all times be accessible.
Desire a extra tailor-made estimate? Use Redfin’s Mortgage Calculator.
How do rates of interest have an effect on your month-to-month mortgage cost?
One of many greatest components in figuring out your month-to-month mortgage funds is the rate of interest. Only a small improve can add considerably to the quantity you pay over the length of your mortgage.
For a 30-year mortgage of $800K:
| Rate of interest | Month-to-month cost (P&I) | Whole curiosity paid over 30 years |
| 6% | $4,796 | $926,560 |
| 6.5% | $5,057 | $1,020,520 |
| 7% | $5,322 | $1,115,920 |
| 8% | $5,870 | $1,313,200 |
A 1% improve in curiosity won’t seem to be a lot on paper, however might price you tens of 1000’s of {dollars} extra in curiosity over the lifetime of the mortgage. Bettering your credit score rating and making a bigger down cost will help you get a decrease charge and scale back the full price of shopping for a home.
How mortgage sort modifications month-to-month funds
There are a number of forms of loans, and every one uniquely impacts your month-to-month mortgage cost and whole curiosity paid over time. Right here’s how among the frequent loans examine when factoring in a 20% down cost:
| Mortgage sort | Month-to-month cost (P&I) | Professionals | Cons | Finest for |
| 30-year fastened mortgage | $5,255 | Decrease month-to-month funds; simpler to qualify for | Increased whole curiosity; slower fairness construct | Patrons who need to unfold funds over an extended interval |
| 15-year fastened mortgage | $6,747 | Repay your property sooner; much less whole curiosity | Increased month-to-month funds; could also be tougher to qualify | Patrons who can afford bigger month-to-month funds and need to save on curiosity |
| Adjustable charge mortgage (ARM) | $5,255 (initially) | Decrease preliminary funds; good for short-term consumers | Funds can improve considerably after a set interval; unpredictable long-term prices | Patrons planning to promote or refinance earlier than charges modify |
How a lot must you put down on a $1M home?
Your down cost impacts your mortgage quantity, month-to-month cost, and determines whether or not you want personal mortgage insurance coverage (PMI). The next down cost means a smaller mortgage, decrease curiosity prices, and, in case your down cost is at the least 20%, eliminates the PMI requirement.
Frequent down cost choices
- 20% down ($200K) – No PMI, decrease month-to-month funds, and fewer curiosity paid over time
- 10% down ($100K) – PMI required, average month-to-month cost
- 5% down ($50K) – PMI required, highest month-to-month cost, and most curiosity paid
Some government-backed loans (FHA, VA, USDA) permit as little as 0–3.5% down, however they hardly ever apply to $1M houses since mortgage limits are decrease.
Earnings wanted for a $1M dwelling (30-year mortgage at 6.875% curiosity)
Earlier than you determine on a house, it’s necessary to know simply how a lot home you’ll be able to afford based mostly in your bills and revenue. Lenders typically recommend following the 28/36 rule to get an thought of what’s inside attain. In keeping with this rule, your month-to-month housing prices shouldn’t exceed 28% of your gross revenue, whereas whole debt funds (comparable to loans and bank cards) ought to stay below 36%.
Beneath is a breakdown of the revenue usually wanted to afford a million-dollar dwelling based mostly on the 28/36 rule.
| Gross month-to-month revenue | Inexpensive mortgage cost | Can afford a $1M dwelling? |
| $8,000 ($72K/12 months) | ~$2,240 | No |
| $16,000 ($192K/12 months) | ~$4,480 | No |
| $24,000 ($288K/12 months) | ~$6,720 | Sure |
Remaining ideas on shopping for a $1M dwelling
Shopping for a million-dollar dwelling comes with important month-to-month prices, particularly in at the moment’s rate of interest setting. Your mortgage sort, down cost, and rate of interest would be the greatest components in figuring out affordability.
- Goal for a 20% down cost if attainable to keep away from PMI and safe higher charges
- Store round for lenders providing aggressive jumbo mortgage charges
- Think about property taxes, insurance coverage, and shutting prices when budgeting
Utilizing Redfin’s Mortgage Calculator can provide you a extra customized estimate earlier than you make a transfer.
