Home Buyer Checklist
How much does a 1% Difference in Your mortgage rate matter?
How a 1% difference in your mortgage rate affects how much you pay
In this example, let’s say you’re looking to take out a home loan for $200,000. If you get a 30-year mortgage and you put down a 20% down payment of $40,000, you’ll have a $160,000 mortgage.
If you only put down 10%, you’ll have a $180,000 mortgage. The following table shows you how much you’ll pay – both per month and over the life of the loan – in each scenario.
Mortgage Rate - 20% Downpayment
- 3.50% = $718
- 3.75% = $741
- 4.00% = $764
- 4.25% = $787
- 4.50% = $811
Mortgage Rate - 10% Downpayment
- 3.50% = $808*
- 3.75% = $834*
- 4.00% = $859*
- 4.25% = $885*
- 4.50% = $912*
In this example, a 1% difference in mortgage rate results in a monthly payment that’s close to $100 higher. But the real difference is how much more you’ll pay in interest over 30 years…more than $33,000! And just think, if you lived in the 1980s when the highest mortgage rate was 18%, you’d be paying thousands a month just in interest!
*Payment amounts shown do not include private mortgage insurance (PMI), which may be required on loans with down payments of less than 20%. The actual monthly payment may be higher.
This calculation does also not include property taxes, which could raise the cost substantially if you live in a high-tax area.
