The total costs of a $200,000 mortgage depend on the interest rate, private mortgage insurance (PMI), as well as closing costs, taxes, and long-term maintenance costs.
Securing a mortgage could be the biggest loan of many homeowners’ lifetimes. With average home prices over $300,000, a $200,000 mortgage might be on the lower end, but you can still pay a lot in interest. But did you know that over 30 years, you could end up paying nearly $450,000 for that loan? Read on to understand the cost of a $200,000 mortgage payment for 30 years and tips to qualify for a mortgage.
How Much Is the Total Cost of a $200,000 Mortgage Over 30 Years?
The total costs of a $200,000 mortgage will vary based on interest rate and private mortgage insurance (PMI). You’ll also need to factor in closing costs, taxes, and long-term maintenance costs.
The simplest answer is that a $200,000 mortgage with a 7% interest rate will cost $479,538 over 30 years. That’s $200,000 in principal plus $279,538 in interest. You’ll pay 139% of the loan value over 30 years. That’s a lot of money that could go into other investment opportunities.
On the other hand, a $200,000 30-year mortgage with a 5% interest rate will cost $186,815 in interest or a total of $386,815.
With current interest rates, finding a 5% interest rate might be difficult. You still have options. You’ll pay less with a 15-year mortgage, even with a 7% interest rate. The total interest payments on a 15-year mortgage with a 7% interest rate will cost $123,668, or $323,668 total with the principal plus interest. That also means you’ll own the home outright in 15 years.
And it doesn’t affect monthly payments as much as expected. For a 15-year option, your monthly payment on a $200,000 mortgage would be $1,797 for principal and interest. You may also need to pay PMI, homeowners insurance and taxes.
You’ll pay around $400 per month less on the 30-year mortgage, with principal and interest payments totaling $1,330. However, if you can stretch to meet the higher monthly payments, you’ll save $155,870 in interest payments over the loan’s lifetime — almost enough for a second home.
Here’s how 15-year and 30-year loans stack up at various interest rates:
| Interest rate | 15-year mortgage monthly payments (principal+interest) | 30-year mortgage monthly payments (principal+interest) | Total interest paid—15 years | Total interest paid—30 years |
| 6% | $1,687 | $1,199 | $103,868 | $231,742 |
| 7% | $1,797 | $1,330 | $123,668 | $279,538 |
| 8% | $1,911 | $1,467 | $144,085 | $328,909 |
| 9% | $2,028 | $1,609 | $165,242 | $379,689 |
In addition, your total home value will be influenced by the down payment size. A 20% downpayment on a $250,000 home would be $50,000. Closing costs are between 2% to 6% of the loan cost. That means you’ll need $4,000 to $12,000.
Private mortgage insurance (PMI) will add 0.22% to 2.25% of your mortgage. That will add between $440 and $4,500 per year to mortgage payments.
How Much Is Your Monthly Payment for a $200,000 Mortgage?
The estimated monthly payment for a $200,000 mortgage over 30 years is $1,330 with a 7% interest rate. Even with a 9% interest rate, the monthly payment for principal and interest only jumps to $1,609. In addition to that, you’ll need to budget for PMI, homeowners insurance, homeowners association (HOA) fees and taxes. Those could add $300 or more to the monthly mortgage costs.
Where to Get a $200,000 Mortgage?
A borrower can get a $200,000 mortgage over 30 years from banks, credit unions, or online mortgage lenders. If you qualify for a government-backed loan like a Federal Housing Administration (FHA) loan, VA loan, or a U.S. Department of Agriculture (USDA) loan, you could (potentially) get a lower interest rate or secure the loan with a lower down payment.
How to Qualify for a $200,000 Mortgage?
To qualify for a $200,000 mortgage, lenders will look at the total available downpayment, credit score, income, employment history, and debt-to-income ratio. Here’s how each factor can affect mortgages available.
Down Payment
Lenders prefer a down payment of at least 20% of the home’s purchase price. With a 20% downpayment, you won’t be required to get private mortgage insurance, saving you 0.022% to 2.25% annually on the loan amount.
Credit Score
Your credit score plays a significant role in determining whether you qualify for a mortgage and the interest rate you will be offered. You may qualify for a loan even with a lower credit score but pay more long term with higher interest rates. You can work to raise your credit score quickly.
Income and Employment History
Lenders also look into your income and employment history to assess your qualifications for the mortgage. Generally, they will look for a minimum of two years at your current employment, with stable or increased income over that time. If you’re self-employed, you may be able to show bank statements as proof of income.
Debt-to-Income Ratio
A lower ratio indicates that you have sufficient income to cover your obligations and increases your likelihood of being approved for a $200,000 mortgage. Lenders look for a 30% or less debt-to-income ratio, including mortgage payments.
That means to qualify for a 30-year mortgage with a 7% interest rate, you’ll need to make at least $4,434 per month or $53,200 a year, assuming you don’t have other debt obligations. If you have other debts, such as student loans or an auto loan, you’ll need to make more to meet low debt-to-income ratio requirements.
How to Apply for a $200,000 Mortgage Payment Over 30 Years
Here are the steps to apply for a $200,000 mortgage over 30 years.
1. Research Mortgage Options
Don’t accept the first rate you receive. Instead, compare interest rates, terms and fees across multiple lenders to make an informed decision. You can now easily compare mortgage rates online and also contact local banks or credit unions.
2. Get Preapproved
Getting preapproved for a mortgage can strengthen your offer when you find a property you wish to purchase. If you apply for preapproval from multiple lenders within a short time, it will only count as one hard inquiry on your credit report and shouldn’t cause a big dip in your credit score.
3. Complete the Application
After preapproval, you’ll need to fill out the mortgage application form provided by the lender to finalize the mortgage rate. Submit all required financial documents to the lender as requested, including a copy of a government-issued ID, proof of income, bank statements, proof of employment and employment history and other documentation.
4. Close the Loan
If approved, you will receive a loan estimate and closing disclosure. You can also get a mortgage lock to ensure the offered interest rate doesn’t change between when you finalize the mortgage offer and close on the property.
Get $200,000 Loans with Benzinga’s Top Mortgage Brokers
If you want to get started researching the best rates, Benzinga’s top mortgage brokers can help you get a 30-year $200,000 loan for less.
Choosing the Best Mortgage for Your Goals
With planning to build your credit score and preparation to meet the loan requirements, you could qualify for a $200,000 mortgage. Whether you get a 15-, 20- or 30-year term will depend on the monthly payment you can afford and other financial factors. Find the best online mortgage lenders and compare rates to understand the best mortgage options for your goals.
Frequently Asked Questions
Can I pay off my $200,000 mortgage early and save on interest payments?
Yes, in many cases, making even one extra mortgage payment annually can help you save significantly on interest payments. Double-check with the mortgage lender that there aren’t any early repayment fees before proceeding with the mortgage.
Is it better to opt for a shorter $200,000 mortgage term to minimize interest payments?
If you can afford the higher monthly payments, opting for a 15- or 20-year mortgage term could help you save $100,000 or more in interest payments over the loan’s lifetime.
Can I refinance my $200,000 mortgage to get a better interest rate and lower my monthly payments?
Yes, you can always refinance a $200,000 mortgage to get a better interest rate. However, calculate closing costs and additional fees to ensure you’ll get long-term savings.
About Alison Plaut
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.