How much does a $400,000 mortgage cost?

When you buy a home, it’s important to consider all of the costs involved. The monthly mortgage payment covers the principal on the loan — but it also includes other expenses like interest, homeowners insurance, property taxes, and more. Calculating the costs of a $400,000 mortgage can help you check whether the payment fits into your budget. 

Monthly payments for a $400,000 mortgage

Your monthly mortgage payment consists of more than just your home cost. When calculating your total payment, make sure you look at everything it consists of, including:

• Principal payment: This is the part of your payment that goes to your principal balance on your mortgage. 
• Interest: Your interest is what you pay on top of your principal for the opportunity to borrow your loan. Sometimes that’s a variable interest rate, which might change regularly, or a fixed interest rate, which doesn’t change for the life of the loan.
• Taxes: You’re on the hook for property taxes, which usually go into an escrow account that your mortgage lender manages.
• Insurance: There are a few different types of insurance you may have to pay for. Most home lenders require homeowners insurance to protect your home in case of a disaster. If you put less than 20% down on a conventional home loan, you’re also required to have private mortgage insurance. Both payments come out of the escrow account managed by your lender.
• HOA fees: If you live in a neighborhood with a homeowners association, you might have to pay for related fees or HOA fees. You might also see condominium fees. These might come out annually, quarterly, or monthly, depending on the fee structure where you live. This isn’t required for all homeowners but it might be part of your payments.

Below, we show a few potential monthly payments based on a fixed interest rate and repayment terms with a 10% down payment. The mortgage calculator pulled in sample costs for homeowners insurance and property taxes based on a ZIP code in South Florida. Your mortgage payment may vary based on these factors.

How to get a $400,000 mortgage

You can apply for a mortgage with any bank or credit union that offers this type of financing. Before applying, it may help to get prequalified to see whether you’re eligible for a loan. This step doesn’t trigger a hard credit check. 

After getting prequalified, you can complete a pre-approval application with several different lenders. It’s important to complete these pre-approvals close together, ideally within a few weeks. This tells credit bureaus you’re rate shopping, and your credit score will lower for one mortgage loan application, rather than many hard credit checks for many different applications.

Compare different pre-approval offers to see which lenders have the lowest interest rates and fewest fees, and use that information to make your decision on which lender to go with for your home loan.

What to keep in mind before applying for a $400,000 mortgage

Keep in mind that the median home sale price in the United States was $420,800 in the first quarter of 2024, so a $400,000 mortgage is on track for many folks buying a home right now. You’ll need to explore both the short-term and long-term costs of your home.

Down payment

Your down payment is the amount you’ll pay upfront to lower the total cost of how much you borrow through a home loan. The larger your down payment, the less you’ll borrow, which means the less you’ll need to pay back, with interest. A higher down payment also means lower monthly payments than if you didn’t have a down payment at all.

Credit score and history 

Your credit score helps determine your interest rate and whether you qualify for a mortgage. A poor credit score could hold you back from getting approved for a home loan. If you are approved with a lower score, you could face much higher interest rates compared to someone who has good or excellent credit. 

Interest

When you get a lower interest rate, you’ll pay less to take out your home loan. Excellent credit typically helps you get the lowest interest rate offered by the lender. But the lower your credit score, the more likely you are to pay a higher interest rate. 

DTI

Your debt-to-income ratio (DTI) shows a lender how much debt you have compared to the amount you earn. A high DTI looks risky to lenders and could hurt your chances of borrowing a home loan for the full amount you need. With a lower DTI, you’re more likely to get approved for larger loan requests.

Repayment terms

Mortgages vary in repayment terms, ranging from 10 years to upward of 30 or sometimes 40 years. A longer repayment term means it’ll take you longer to repay your outstanding loan balance in full. However, it could also mean more affordable monthly payments that you may not otherwise be able to afford. 

If you want to pay off your loan sooner and have the budget for it, consider shorter repayment terms. If you need lower monthly payments, then look into longer repayment terms.

Amortization table on a $400,000 mortgage

Here’s an amortization schedule for a $400,000 mortgage on a 30-year term and a 6% fixed rate:

Here’s an amortization schedule for a $400,000 mortgage on a 15-year term and a 6% fixed rate:

A step-by-step guide to getting a $400,000 mortgage

When it’s time to get a mortgage, you’ll need to have some important details and documents at the ready:

1. Check your credit score: Your credit score will help you determine how much you can borrow and see if you’re eligible to take on a $400,000 mortgage.
2. Figure out your budget: You’ll need to know how much home you can comfortably afford. Estimate your monthly budget, including your home costs and other needs, so you can figure out if $400,000 mortgage payments are viable.
3. Compare lenders: Look at which lenders are available based on details like the mortgage program you’re considering, interest rates, repayment terms, and fees.
4. Complete pre-approvals: You can get pre-approved from a few different lenders. Take the one you want to go with when you start shopping for homes.
5. Browse homes: Take tours and go to open houses for homes in your preferred neighborhoods.
6. Put in an offer: Once you’ve found a home you like, put in an offer and negotiate home prices and details. 
7. Apply for a home loan: Now you’ll submit an official mortgage application with the lender of your choice. You’ll also hand over documents, such as tax forms and bank account statements, for the underwriting process.
8. Close on the home: After you’re approved for the home loan, prepare for closing. Get your down payment ready as well as any fees and related costs. Sign your paperwork and get your keys to your new home.