Buying a home can be an exciting experience, but it’s also a significant financial responsibility. So it’s essential to take stock of all the expenses before you apply for a loan, especially the monthly payment. But if you’ve never applied for a mortgage before, you may not know what to expect. So, to help you prepare, here’s a look at the monthly payment for a $350,000 mortgage.
Monthly Mortgage Payment for a $350,000 Mortgage
Your monthly mortgage payment depends on various factors and won’t be the same for everyone, even if the home is worth the same amount. The two factors that will impact your monthly payment the most are your interest rate and the size of your down payment.
The lender will calculate your monthly payment based on the interest owed against the remaining balance on the loan. So, say you make a 20% down payment ($70,000) and get an interest rate of 5.5%. That would leave you with an outstanding balance of $280,000 and a monthly mortgage payment of $1590 for a 30-year fixed rate loan (or $2,288 for a 15-year fixed rate loan). But this amount can vary depending on your income, credit, and down payment.
Total Interest Paid on a $350,000 Mortgage
Every time you make a payment, a portion of the money will go to pay down the principal, and the rest will go toward paying the interest owed to the bank. At the beginning of the loan, most of the payment will go toward interest, but as you whittle away the principal, the ratio will slowly shift until the loan is completely paid off. So, you may want to calculate the total interest on the loan so you’re aware of how much you’ll be paying over the life of the loan.
But again, the total interest depends on the terms of the loan, mainly the repayment period, outstanding balance, and interest rate. So, in the above example of a 30-year, fixed-rate loan with an interest rate of 5.5% and an outstanding balance of $280,000, you’d pay $292,331.31.
If you want to reduce this amount, there are two ways: pay it off early (although be careful of prepayment penalties) or go with a shorter loan term. For instance, the interest paid on a 15-year fixed rate loan with the same terms would only be $131,810.06. So, your monthly payment would be higher, but you’d also pay down the loan much faster.
$350,000 Mortgage Amortization Schedule
You can use an amortization schedule to see how your payments are divided between principal and interest. Amortization is an accounting principle that allows a borrower to pay off a loan in equal installments split between interest and principal. An amortization schedule helps chart this process. Here’s a 12-month amortization schedule for the example listed above.
As you can see, as you make payments toward the principal, the amount of interest also decreases because it’s calculated as a percentage of the outstanding balance. This chart shows the first year of payments, but you can extend the table as far as you like to see how the loan is paid over time.
How to Get a $350,000 Mortgage
Getting a $350,000 mortgage is fairly easy as long as you qualify for the loan. Most lenders require a credit score in the mid to high 600s, although some accept scores as low as 620. If your credit score is lower, you may look into government-backed loan programs such as FHA, VA, and USDA loans, which have laxer credit requirements.
You’ll also need to prove you have enough income to pay the loan each month. Exact income requirements vary depending on the lender, but most experts agree that you shouldn’t spend more than 28% of your income on your mortgage. So, with a $1590 monthly mortgage payment, you’ll want to make at least $65,000 to afford the loan safely.
Where to Get a $350,000 Mortgage
You can get a $350,000 mortgage from almost any traditional lender offering home loans, such as a bank or credit union. However, with the rise of online lending programs, you can also find plenty of decent options on the internet, which benefit some borrowers.
If there’s a specific type of loan you’re looking for, such as a government-backed loan, you should research lenders in your area who specialize in that type of financial product. The best thing is to shop around at as many different lenders as possible to get the best rate. Some offer discounts and incentives to certain types of borrowers, such as first-time home buyers. But you’ll never know what’s out there if you don’t look.