When buying a house, many of us get caught up in the down payment and other large upfront costs. It’s important to factor in the long-term costs associated with a $250,000 mortgage, which includes the monthly mortgage payment.
Just how much will that payment be each month? Read to learn the monthly cost of a $250K mortgage.
Total Cost of a $250K Mortgage
Homebuyers have some large expenses to deal with before making mortgage payments. Both upfront costs and long-term expenses should factor into figuring out how much house you can afford.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Upfront Costs
Upfront costs associated with buying a home are more than just the earnest money and down payment. A buyer can expect to pay closing costs, including some or all of the following:
• Abstract and recording fees associated with the documentation of a property, which can cost from between $200 to $1,200 and $125, respectively.
• Application fees for a mortgage from the lender, which can cost up to $500.
• Appraisal fees to estimate the home’s value for the lender, which could cost between $300 to $400.
• Home inspection fees if the buyer opts for an inspection of the property before buying, can run between $300 to $500 on average.
• Title search and title insurance fees are required to ensure there are no liens or unexpected claims to the property being purchased. This usually costs between $75 to $200.
These fees before and during closing don’t include the down payment. The median down payment on a house is 13%, but to avoid things like private mortgage insurance, a buyer may have to put down as much as 20% of the home’s purchase price.
A buyer who takes out a $250K mortgage and makes a 20% down payment is likely putting in around $62,500. In addition to the down payment and closing costs, keep in mind expenses around moving and furnishing a new home.
💡 Quick Tip: You deserve a more zen mortgage. SoFi Mortgage Loan Officers are dedicated to closing your loan on time — backed by a $5,000 guarantee offer.‡
Long-Term Costs
You’ll pay down the principal plus interest on your loan over the long term, with a higher proportion of interest in your monthly payments early in the life of the loan. Near the end of your loan term, you’ll be paying almost entirely principal.
If you put down less than 20% on your home, you may also be paying private mortgage insurance (PMI) each month. Here are some other long-term costs:
• Maintenance Homeowners should factor in the cost of maintenance and repairs in their long-term housing budget. Many owners default to the 1% rule, setting aside 1% of a home’s purchase price annually for ongoing repair costs.
• Property taxes These vary based on your location but can be thousands of dollars a year.
• Homeowners association (HOA), co-op, or condo fees These also vary, but you will know what they are before you close on the property.
• Insurance Depending on where your home is located, you may need hazard insurance to cover you in the event of a natural disaster, in addition to standard homeowners insurance.
Recommended: First-Time Homebuyer Guide
Estimated Monthly Payments on a $250K Mortgage
The monthly cost of a $250K mortgage payment will vary based on several factors, including:
• Down payment, or how much a buyer puts down when purchasing a home
• Length of loan, or the timeline in which a buyer agrees to pay off their mortgage
• APR, the annual percentage rate of the mortgage
Breaking things down further, the terms can also influence the monthly payments on a $250K mortgage. Buyers can choose between a:
• Fixed-rate mortgage, where they pay the same APR over the life of the loan.
• Adjustable-rate mortgage (ARM), where buyers typically pay a lower rate at the beginning of the loan, but the APR will change over the life of the loan.
How you choose from among the different types of home mortgage loans will depend on your financial goals and qualifications.
Monthly Payment Breakdown by APR and Term
What interest rate a buyer will get when applying for a mortgage depends on the market and their financial history. The length of the loan can also impact the estimated monthly mortgage payment. A 30-year loan will have lower monthly payments but you will pay significantly more interest over the life of the loan:
| Interest rate | 15-year term | 30-year term |
|---|---|---|
| 3.00% | $1,726 | $1,054 |
| 3.5% | $1,787 | $1,122 |
| 4% | $1,849 | $1,193 |
| 4.5% | $1,912 | $1,266 |
| 5% | $1,976 | $1,342 |
| 5.5% | $2,043 | $1,419 |
| 6% | $2,110 | $1,499 |
| 6.5% | $2,178 | $1,580 |
| 7% | $2,247 | $1,663 |
As a reminder, these estimates do not include additional costs that might be included in monthly payments, like insurance and property taxes. Consider using a mortgage calculator to figure out monthly payments based on personalized annual percentage rate (APR) and terms.
How Much Interest Is Accrued on a $250K Mortgage?
How much interest a homeowner will accrue on a $250K mortgage depends on the APR and terms of the loan. As a general rule of thumb:
• The higher the APR, the more interest paid
• The longer the loan, the more interest paid
In the beginning, monthly mortgage payments will primarily cover the interest on the mortgage, paying only a small portion of the principal. However, over the life of the loan, the homeowner begins to pay more toward the principal and less in interest.
For example, on a $250K mortgage with a 30-year loan term and 4% APR, a buyer can expect to pay $179,673.77 in interest over the life of the loan. For a $250K mortgage with a 15-year loan term and 4% APR, a buyer will pay $82,859.57 in interest.
While the owner will pay less in interest with a shorter loan term, they can expect higher monthly payments than a 30-year loan term.
💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.
$250K Mortgage Amortization Breakdown
Suppose a buyer secures a $250K mortgage on a home with a 7% rate and a 15-year term. Their monthly payment on the mortgage, including principal and interest, would be roughly $2,247.
Here’s how those payments would split between interest and principal balance over the life of the loan, otherwise known as an amortization breakdown:
| Year | Beginning balance | Annual interest paid | Annual principal paid | Ending balance |
|---|---|---|---|---|
| 1 | $250,000 | $17,190 | $9,774 | $240,226 |
| 2 | $240,226 | $16,484 | $10,481 | $229,744 |
| 3 | $229,744 | $15,726 | $11,239 | $218,506 |
| 4 | $218,506 | $14,914 | $12,051 | $206,454 |
| 5 | $206,454 | $14,042 | $12,922 | $193,532 |
| 6 | $193,532 | $13,108 | $13,857 | $179,675 |
| 7 | $179,675 | $12,107 | $14,858 | $164,817 |
| 8 | $164,817 | $11,032 | $15,932 | $148,885 |
| 9 | $148,885 | $9,881 | $17,084 | $131,801 |
| 10 | $131,801 | $8,646 | $18,319 | $113,482 |
| 11 | $113,482 | $7,321 | $19,643 | $93,838 |
| 12 | $93,838 | $5,901 | $21,063 | $72,775 |
| 13 | $72,775 | $4,379 | $22,586 | $50,189 |
| 14 | $50,189 | $2,746 | $24,219 | $25,970 |
| 15 | $25,970 | $995 | $25,970 | $0 |
Keep in mind that this table doesn’t include additional costs that may be rolled into mortgage payments, such as insurance or property taxes.
Amortization tables can be helpful tools for understanding payments across the life of a mortgage.
What Is Required to Get a $250K Mortgage?
The process of getting a $250K mortgage has several requirements, including:
• You’ll need a credit score of at least 500 for some mortgages, but most lenders require a score of 620 or more
• You’ll prequalify for a mortgage. You’ll provide a little information about yourself and the lender will perform a soft credit inquiry. This will give you a sense of what the lender might offer in terms of interest rate.
• You’ll find the right lender. The right lender for a borrower will vary based on the rates they offer, in addition to other fees and features.
• You’ll fill out a mortgage application and get preapproved for your mortgage. The application may require tax documents, W-2s, and bank account statements. If you’re preapproved, you’ll receive a letter from the lender providing conditional approval for the mortgage within a certain window, typically 60 to 90 days. SoFi’s Help Center can help you start your journey to homeownership today.
The Takeaway
Considering monthly payments on a $250,000 mortgage is an important step in understanding the budget behind buying a home. Multiple factors can impact the monthly cost, including interest rate and loan terms, making it essential to consider all options and make the choice that best suits your budget.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
What’s the monthly payment on a $250K mortgage?
The size of your payment will depend primarily on the length of the loan’s term and its interest rate. A 15-year term at 7% would give you a monthly payment of about $2,247, while a 30-year term at 7% would yield a payment of $1,663. Note that although the 30-year term has a lower monthly payment, you’ll pay significantly more in interest over the lifetime of the loan.
How long will it take to pay off a $250K mortgage?
How long it takes to pay off a $250,000 mortgage will depend on the term of your loan and whether you refinance along the way. You might have a loan term of 30, 20, 15, or even 10 years. And remember, you can always pay off your loan sooner if you like, although in rare cases there can be a prepayment penalty.
How much do I need to earn to get a $250K mortgage?
You’d need to earn about $90,000 per year in order to afford a $250,000 mortgage, so that your monthly debt payments don’t cause undue financial stress.
Photo credit: iStock/Worawee Meepian
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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