How much does a $100,000 mortgage cost?

If you’re thinking about buying a house, you’re probably wondering how to keep mortgage costs down — especially as interest rates remain high. Federal Reserve policymakers voted at their June meeting to keep the federal funds rate steady, projecting a rate cut of 0.25 percentage points to come later in 2024. While future cuts and the timeline are uncertain, there are costs you can plan to take control of now.

If you’re planning to take out a $100,000 mortgage, remember it will come with upfront costs, like the down payment and closing fees, as well as ongoing expenses like your mortgage payment, interest, and escrow.

You're going to have upfront costs, like the down payment and closing fees. But you’re also going to have ongoing expenses like your monthly payment, interest fees, and escrow.

Understanding these expenses can give you a clearer idea of what your monthly payment will look like on a $100,000 loan — and the total cost of your mortgage.

Monthly payments for a $100,000 mortgage

When you get a mortgage, you’ll have to make monthly payments until you pay it off. These payments go toward your principal balance, interest, property taxes, and homeowners insurance.

Here’s what you can expect your monthly loan payments to cover:

• Principal or loan balance: This is the amount of money you owe on your loan — in this case, $100,000. You’ll pay less toward your principal and more toward interest near the beginning of your loan. Over time, more of your payment will go toward the principal instead.
• Interest: This is what the lender charges you to borrow money. It’s expressed as a percentage of the loan. You’ll pay more toward interest near the beginning of your loan, and less near the end. Some mortgage loans come with fixed interest, which never changes, while others have variable rates.
• Escrow/additional costs: Some of your monthly payment will go into an escrow account, which includes your property taxes, private mortgage insurance (PMI), and home insurance. Your loan servicer will use this account to pay these bills when they’re due.

Keep in mind that your monthly payment will also be affected by your repayment term — that is, how long you have to pay back the loan. Common loan terms are 15 or 30 years, but there are also custom terms. The longer your term is, the lower your monthly payments but the higher your overall interest charges.

Here’s a breakdown of what your monthly payment on a $100,000 mortgage might look like — accounting for principal and interest only:

Where to get a $100,000 mortgage

You can get a $100,000 mortgage from credit unions, banks, and some private online lenders. Since every lender is different, it’s important to shop around and compare your options.

Check out their APRs, loan terms, fees, and eligibility requirements. Making a shortlist of a few lenders with the best terms and rates can help you get the most affordable loan possible.

Some lenders offer down payment or closing cost assistance to buyers, including first-time homebuyers, but they vary by location. 

You can also complete the pre-approval process with your chosen lenders. This will give you a better idea of how much you can qualify for and what your total costs might be. Pre-approval does require a hard credit check. The good news is that any credit checks will count as one if you do them within 45 days.

What to consider before applying for a $100,000 mortgage

Knowing your $100,000 mortgage payment is one thing. But it’s also important to understand the upfront and long-term costs associated with getting a home loan. This will help prepare you financially — and emotionally — for the total cost of your purchase.

Here are the typical upfront costs:

• Down payment: Most mortgage lenders require a minimum down payment of 3% to 5% of the total purchase price. The higher your down payment is, the smaller your loan — and the lower your monthly and interest charges.
• Closing costs: Closing fees include origination fees, tax service fees, title insurance, government taxes, and appraisal fees. Typical closing costs are 1.81% of the home purchase price, but they may vary by location. You might be able to roll some closing costs into your loan, but this will increase your monthly payment.
• Discount points: The more points you purchase, the lower your interest rate. To get these, you’ll need to pay more at closing. Each point is equal to 1% of your loan amount. On a $100,000 mortgage, for example, you’ll need to pay $1,000 for one point.
• Additional costs: You might also need to pay for maintenance, minor repairs, furniture, or moving expenses. These can vary, but it helps to be prepared.

Besides your monthly mortgage payment — that is, the interest, principal, and escrow costs — here are some common long-term costs:

• PMI: This is required when you get a conventional home loan and have a down payment that’s less than 20% of the home purchase price. You can get rid of PMI once you’ve built up equity in your home.
• Homeowners insurance: You must get insurance when buying a home. Premiums and the minimum required coverage vary widely.
• Property taxes: Property taxes are based on your home’s market value and can fluctuate over time. You’ll need to continue paying these even after you’ve paid off your mortgage.
• Utilities and other services: Be prepared to pay for electricity, water, sewer, internet, and other services in your new home.
• HOA fees: If you live in a community with a homeowners association (HOA), you’ll need to pay a monthly or annual fee.

You should also consider how affordable a $100,000 mortgage would be for you. A good way to measure this is by looking at your debt-to-income ratio (DTI). This describes what percent of your gross monthly income goes toward paying your debts. To calculate your DTI, divide your monthly debt payments by your income. Lenders typically are more willing to extend you a loan if your DTI is below 45%. 

A good rule of thumb is to pay less than 30% of your income on housing costs. This includes your mortgage payment, property taxes, homeowners insurance, and other fees. To figure this out, use a mortgage calculator to estimate your payment with fees, and divide that number by your gross monthly income. For example, if your monthly mortgage payment is $800 and your monthly income before taxes is $3,000, that would mean you’d spend about 27% of your income on housing. Taking a look at your housing cost and total debts will help you set your budget as you begin shopping for a home.

Amortization table on a $100,000 mortgage

An amortization schedule breaks down your $100,000 mortgage payment by year — and sometimes by month. It tells you how much you can expect to pay in interest and principal, as well as your remaining balance.

Here’s what the estimated costs for a 30-year, $100,000 mortgage with a 6% fixed interest rate (or APR) could look like:

Here’s what the payments for a 15-year, $100,000 mortgage with a 6% fixed APR could look like:

How to get a $100,000 mortgage

Getting a $100,000 mortgage doesn’t have to be complicated, but it’s still important to take it step by step. Here’s how to do it:

1. Determine your budget: Use a mortgage calculator to determine the loan payment on a $100,000 mortgage. Review your income, expenses, and debts to make sure the cost aligns with your budget. If it doesn’t, you may need to wait or change your purchase budget.
2. Save for upfront costs: This includes any closing costs, moving expenses, and the down payment. You might also want to create a separate budget for home maintenance or furniture costs.
3. Check your credit: Get a copy of your full credit report and review it thoroughly. Late payments, high credit utilization, accounts in collections, and other negative marks can bring down your credit score. The higher your credit score the more likely you are to qualify for the best rates and terms.
4. Compare lenders: Shop around for several lenders to see what they offer. Narrow down your options until you find the best one for you.
5. Get pre-approved: A pre-approval letter indicates how much you qualify for as you start shopping for homes. If the housing market in your area is highly competitive, it can also help you stand out from other buyers.
6. Make an offer and negotiate: Once you find the home of your dreams, put in an offer and start negotiating the sales contract.
7. Apply for the loan:. When your offer is accepted, it’s time to apply with your preferred lender. You’ll need to complete their formal application process and provide any requested documentation — to verify your identity, income, assets, and liabilities.
8. Wait for approval: After you’ve completed the application, the loan underwriter will review it and make their decision.
9. Prepare for closing: If approved, you’ll receive a closing date, which is when you’ll sign any final documents, pay the down payment and closing costs, and get the keys to your new home. If you haven’t already, now’s the time to get homeowners insurance..