How Much Is a Mortgage on a $500k House?

Based on current mortgage rates hovering around 7.25% and assuming that the applicant has good credit (700+), the mortgage on a $500,000 house would be $3,125. As you search for answers to the question: how much is a mortgage on a 500k house, you’ll see varying numbers based on your local property tax rates, homeowners insurance, your credit score, etc. But the total will likely be in the low $3,000 per month range.

Key Points:

• With interest rates hovering around 7.25%, your mortgage payment will be $3,125 for a $500,000 mortgage
• In addition to interest rates, other factors that impact your mortgage payment include the property tax rate, insurance and loan term (i.e., duration)
• If you don’t put 20% down, you could also have to pay private mortgage insurance (PMI), which will further increase the cost of your monthly payment

How Much Does a $500,000 House Cost Now?

A $500,000 house now, costs $100,000 to put 20% down plus 2-3% in closing costs, or approximately $15,000. Your mortgage payment would then be about $3,125, assuming you have good credit and are getting a 30-year fixed loan with a 7.25% interest rate. 

Interest rates for a 15-year loan are about 6.5% currently, making the monthly payment $3,879. You also have an option to choose a 30-year adjustable-rate mortgage. These loans can help you secure low interest rates to start the loan, such as in the case of a 10/1 adjustable-rate mortgage (ARM) where your loan would be fixed for the first 120 months and then adjust annually after those first 10 years. 

The challenge is, you’ll be subject to the interest rates 10 years from now. Depending on your ability to pay down your loan in those initial years where you’ve locked in a lower rate, the total amount you pay for your loan over its term could be lower but it all depends on your unique factors and what happens with interest rates by time your loan terms become variable.

30-Year Fixed Mortgage Rate

As you evaluate how much your mortgage will cost you for a $500,000 home, look at how various interest rates will impact your monthly payment to find the best time to buy.

15-Year Fixed Mortgage Rate

A 15-year mortgage can reduce the total amount you pay in interest and often secure you a lower rate. But you’ll need to be comfortable with larger payments to pay off the loan twice as fast.

Adjustable-Rate Mortgage

An adjustable-rate mortgage (ARM) often comes with a set number of years that you’ll pay the same term. The first number is the set years to start and the second number indicates how often the rate will adjust. For example, a 5/1 ARM has a 5-year period where you’ll pay the same interest rate and then it will adjust every year. A 5/5 ARM has a set 5-year period with one interest rate and then your rates can change every 5 years.

These loans often have an interest rate cap in which you can’t pay more than that set amount. Additionally, the margin is fixed for the life of the loan. The margin sets the percentage points added to the index to find your interest rates based on current rates at the time your rate adjusts. 

This loan type can be good if you only plan to be in the home for a short time, which helps you pay down the loan in those early years. It’s also good for loans where you’re comfortable paying the closing costs to refinance at the end of the introductory rates. You might also find an ARM helpful when you have more disposable income to put toward paying the mortgage down during the introductory period to close out your loan before it adjusts annually, or even every six months.

How Much Is the Down Payment for a $500,000 House?

The down payment for a $500,000 house will be 3-20% depending on the loan type you select. That means that you’ll need to have $15,000 to $100,000 on hand to purchase the home. Here’s a look at various loan types and the down payment you’ll need.

Conventional Loans 

Conventional loans often require a 20% down payment but you might find lenders willing to provide the loan with as little as 3% down. Just know that you’ll then be paying PMI until you’ve paid down 20% of the home’s value.

Conforming Loans

With a conforming loan, you’ll be working with a lender that follows Fannie Mae and Freddie Mac guidelines. That means that you’ll need to put 3-20% down to purchase your home. That translates to $15,000-$100,000 for a $500,000 home. If you put down less than 20%, you’ll be paying PMI.

FHA Loans

An FHA loan is a loan that the federal government backs. You can purchase a home with as little as 3.5% down. For a $500,000 home, that is $17,500. These loans offer more flexible underwriting to help new buyers purchase homes, but because you’re putting so little down, you can also expect larger mortgage insurance premiums, which will increase your monthly payment.

USDA

These home loans have maximums that are far lower than other loans. For example, in Ohio the maximum loan limit is $417,000, meaning you’d have to put $83,000 down. The locations where you can purchase a home with a USDA loan will also vary. These loans are only available to low- and middle-income buyers. The home must be located in a rural area to qualify. However, you can get a USDA loan with no money down if you meet the eligibility criteria and purchase an eligible home.

VA Loans

Veterans and active duty military members or their surviving spouses can qualify for a VA loan. These loans allow you to put no money down to purchase a home. Just know that then you’ll be borrowing far more for the loan and paying large monthly payments than what is shown above.

Compare the Best Mortgage Lenders from Benzinga’s Top Home Loan Providers

Review these leading mortgage loan providers to check rates based on your unique circumstances.

Finding Favorable Rates and Terms for a $500k House

If you’re in the market for a $500k house, you’ll want to review the rates and terms available to you on various loan types and sizes. Evaluate how much you can put down to make the monthly payment more affordable. Also, review the property tax rates in the area you’re house shopping to factor that into the monthly payment. Avoid overstretching yourself to where you can’t afford to maintain the home in case something goes wrong.

Frequently Asked Questions