Monthly payments for a $350,000 home

Quick insights

• The monthly principal and interest payment for a mortgage on a $350,000 house can be calculated using a standard formula.
• The loan amount, term and interest are among the most important factors that affect the real numbers of a mortgage calculation.
• Other variable costs to plan for include closing costs, private mortgage insurance and property taxes.

If you’re excitedly preparing to buy a home, you may be wondering what a realistic budget is—both monthly and for your overall purchase. In this article, we’ll walk through some calculations you can use to assess affordability for your home purchase, including how to calculate the monthly payment for a $350,000 home mortgage, closing costs and required income.

Calculating monthly costs: $350,000 home mortgage payment

To calculate what the monthly payment for a $350,000 home purchase would be, you will need to also determine the interest rate and loan term. The loan “term” refers to how long you will be repaying the loan—often 15 or 30 years. A lower interest rate can help reduce how much you spend on a loan over time, so it’s often a key comparison factor when shopping for a loan. Fixed-rate loans have interest rates that never change, while adjustable-rate mortgages (ARM) have rates that can change over time.

Monthly mortgage payment formula

Here’s the standard formula used to calculate a monthly mortgage payment (principal and interest):

M = P[ r(1+r)ⁿ ] / [ (1+r)ⁿ⁻¹ ]

• P represents the loan principal.
• r is the monthly interest rate (annual rate divided by 12 months).
• n is the number of payments (loan term in years multiplied by 12).

Example calculation

Using the formula for a $350,000 mortgage still requires certain figures. As an example, let’s use the following:

• Loan principal: $280,000 (assumes a 20% down payment)
• Interest rate: 6.5% fixed
• Number of payments: 360 (30-year term)

This would result in a monthly payment of approximately $1,770. Keep in mind, this figure does not include property taxes or homeowners insurance, among others. These costs vary based on your loan specifics and property details.

The total costs of repaying a mortgage loan

Using the formula above, here are approximate calculations for buying a $350,000 home.

15-year fixed rate mortgage, assuming 20% down and 6.5% interest rate

• Cost over 15 years: $439,040
• Total interest paid: $159,040

30-year fixed rate mortgage, assuming 20% down and 6.5% interest rate

• Cost over 30 years: $637,120
• Total interest paid: $357,120

There are additional expenses that vary significantly by property and loan terms. Ultimately, these expenses can add a lot to the total costs of buying a home.

Calculating additional costs to purchase a $350,000 home

The principal and interest monthly payment is important to understand when considering a mortgage loan. However, the payment is one of several expenses worth estimating before you buy.

The impact of a down payment

Depending on the specifics of your loan, you may need to make a down payment of 3–20%. While this may seem like a barrier to homeownership, a larger down payment can help reduce your monthly payments. On a $350,000 home, a down payment of 20% would be $70,000. If this down payment was made, the loan principal could be reduced to $280,000. When we apply the monthly payment formula, this results in a new, lower monthly payment of $1,768.45.

Closing costs

Closing costs are typically 2–5% of the purchase price of the home.ec-closing-costs-calculator These often include expenses that are accumulated during the homebuying transaction, such as inspection fees, appraisal fees and title insurance. On a home that costs $350,000, 2–5% in closing costs could be an additional $7,000–$17,500.

Additional ongoing costs

• Private mortgage insurance (PMI): If you make a down payment of less than 20%, you may need to pay for PMI. This can include an up-front cost as well as an addition to your monthly total. PMI costs will vary by insurer and the details of your financial profile.
• Property taxes and insurance escrow: It’s common for lenders to pay property taxes on your behalf. If so, property tax estimates would be paid as part of a monthly mortgage bill and go into an escrow account. Depending on your lender, you may also need to deposit several months’ worth of insurance and property taxes into an escrow account up front at the time of purchase.

How much income do I need for a $350,000 home?

Lenders use multiple factors from your application to determine affordability for a mortgage. Income is considered, but so are your credit score, debt-to-income ratio (DTI) and down payment size. While lenders conduct affordability assessments, it’s beneficial for prospective homebuyers to calculate their own figures before buying a home.

To get a sense of how much home you can afford, you may want to try a mortgage calculator or connect with a Chase Home Lending Advisor.

How to get a $350,000 home mortgage

Getting a mortgage on a $350,000 home requires many smaller steps, but here are important and common parts of the process.

• Step 1: Consider your budget. Before you begin working with lenders, it can be helpful to conduct your own affordability assessment to get a sense of what size loan you will need. This can also help you confirm your readiness and pacing toward homeownership.
• Step 2: Seek preapproval. Preapproval is a type of preliminary approval indicating how much a certain lender is likely to extend to you in a real loan offer. Having preapproval can help signal your intention to buy to potential sellers.
• Step 3: Shop for a home. Equipped with a preapproval, you can begin shopping seriously for a home. When you find a home for you, it may be time to make an offer.
• Step 4: Offer and closing. Either independently or with the assistance of a real estate agent, you can make an offer on your chosen home. When the offer is accepted, you can finalize your loan details with the lender and begin checking off closing tasks.

Bottom line

Estimating the cost of a hypothetical mortgage’s monthly payments can help give you a sense of the real numbers. However, without hard figures and details relating to the specific mortgage, these estimations have the potential to vary significantly from what ends up in a final loan offer. To discuss information that can help guide your financial planning, consider connecting with a Chase Home Lending Advisor.