How much is a mortgage on a $700K house?

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If you're thinking about buying a home for $700,000, mortgage payment amounts are surely of great interest to you. Figuring out whether you can afford a $700,000 home is important to make sure you can afford the monthly payment and the other expenses that come with homeownership.

How much is the mortgage payment on a home that costs $700,000? Expect to pay somewhere between $4,000 and $5,800 a month. The specific amount will depend on how much of a down payment you can afford, the interest rate on your loan, the loan term, and the mortgage type, plus how much you need to set aside in an escrow account for property taxes, homeowners insurance, and homeowners association fees.

We’ll break down what’s included in the monthly payment on a $700,000 home so you can get an idea of how buying a property at that price will affect your budget and long-term financial goals.

What’s included in a monthly mortgage payment?

Your monthly mortgage payment includes several different costs, usually called PITI for principal, interest, taxes, and insurance.

The primary expenses are the interest and principal on the amount you borrowed. Your monthly payment breakdown also can include mortgage insurance and payments toward your property taxes and homeowners insurance, if you pay those bills through an escrow account. You also may have to pay homeowners association fees if the home you're buying is part of an HOA.

The costs that are part of your loan depend on the type of loan you choose and the specific details of your loan. For example, if you get a conventional loan and put down 20% for a down payment, you can avoid paying for mortgage insurance.

We’ll cover how each factor works and how it affects your monthly payment.

Principal and interest

The principal and interest portion of your monthly payment is usually the largest component of your monthly bill.

Each month, your loan balance accrues interest. Your monthly payment is amortized so that it pays off all interest that has accrued since your last payment, plus a portion of the principal.

Each payment reduces your loan's balance, meaning less interest accrues and a larger portion of each payment goes toward the principal, rather than interest, until the loan is paid off.

Property taxes

State and local governments charge property taxes to pay for schools, road maintenance, fire and police departments, parks, and other services.

How much you pay depends on your home’s assessed value and the property tax rate in your area.

If you're buying a home, you can determine tax rates and values by checking with the local assessor’s office.

Homeowners insurance

Most lenders require you to buy a homeowners insurance policy to protect your home from damage from things like wind or hail. It also protects you from liability if someone gets hurt on your property.

When you buy a home, you can shop around and choose the insurance providers that best fit your needs. You need a policy before closing. Some lenders will make you pay for insurance each month through escrow, while others will let you pay the insurance bill on your own.

Mortgage insurance

Mortgage insurance protects the lender from losses if you default on your loan.

There are two main types of mortgage insurance: private mortgage insurance (PMI) and mortgage insurance premiums (MIP).

You pay PMI if you buy a home with a conforming conventional loan and a down payment of less than 20% of the home's value. It typically ranges from 0.2% to 2% of the loan amount each year. For a $700,000 home with 5% down, expect to pay between $1,330 and $13,300 per year for PMI. You can stop paying for PMI once you have 20% equity in the home.

You pay MIP if you buy a home with an FHA loan. You’ll pay 1.75% of the loan amount up front and between 0.15% and 0.75% of the loan amount each year, depending on the loan’s term and your down payment. That means that you’ll pay $12,250 upfront and between $1,050 and $5,250 a year. You pay MIP either for 11 years or the full loan term, depending on your down payment.

VA and USDA loans do not charge mortgage insurance. However, VA loan borrowers must pay an up-front VA funding fee, while USDA loans require borrowers to pay up-front and annual guarantee fees.

HOA fees

If you're buying a home that's part of a homeowners association, you'll need to pay HOA fees. These fees cover expenses common to homeowners in the association. It may include maintenance of common areas, trash collection, parking, and building management. You can't opt out of membership when buying a home with an HOA, so it's important to understand in advance how your HOA works and what the fees are.

Breaking down the numbers for a $700K house

When you’re applying for a loan, it’s important to compare offers from multiple lenders. While it can be difficult to predict property taxes or insurance costs, you can calculate the principal and interest cost of a loan solely from the amount you borrow, the loan term, and the interest rate.

If you qualify for a $700,000 home, expect to pay about $5,522 a month in principal and interest with a 15-year loan and about $4,203 a month if you get a 30-year loan.

Fifteen-year loans have a higher monthly payment than 30-year loans because of their shorter amortization schedule. Amortization is the process through which your payments reduce your loan’s balance, eventually paying it off.

Amortization schedule for a $700K mortgage

An amortization schedule shows how each mortgage payment is applied to principal and interest. At the start of the loan term, most of your mortgage payment will go toward interest, and the balance will decrease slowly. By the end of the term, most of what you're paying is applied to the balance, with the final installment reducing your debt to zero.

This is a sample amortization schedule for buying a $700,000 home with 5% down and a 15-year fixed-rate mortgage at 5.75%.^*

This is a sample amortization schedule for buying the same home with 5% down and a 30-year fixed-rate mortgage at 6.5%.^*

You can use the Rocket Mortgage^® amortization calculator to see how the monthly mortgage payment breaks down in various scenarios.

Eligibility requirements for a $700K mortgage

When you apply for a mortgage, your lender will review your finances to ensure you can afford to repay the loan. After you apply and submit your documentation, your lender will underwrite the loan and look at the following factors:

• Credit score and credit history
• Debt-to-income ratio
• Employment history
• Savings for the down payment and closing costs

Each loan type has specific requirements, and lenders may set their own standards on top of that. Requirements also can be stricter for larger loans, so if you're unable to qualify for a $700,000 mortgage, you may qualify for a $550,000 loan.

FAQ

Here are answers to common questions about buying a $700,000 home.

How much income do I need for a $700,000 home?

There are a few common rules for determining the income needed to buy a home. One guideline suggests buying a home that costs no more than two or three times your annual household income. That means you should earn between $233,333 and $350,000 a year to afford a $700,000 home. There also is the 28/36 rule, which states that your housing costs should total no more than 28% of your gross monthly income, and your total debts should be no more than 36%. You can use a home affordability calculator to help you understand what you can afford.

What would my down payment be for a $700,000 home?

The minimum down payment you'll need will depend on the type of loan you choose. Fixed-rate conforming conventional loans require a 3% down payment,¹ while FHA loans require a 3.5% down payment with a credit score of at least 580.² VA and USDA loans have no down payment requirement. The down payment on a $700,000 loan could range from zero for a VA or USDA loan to $21,000 for a conforming conventional loan and $24,500 for an FHA loan. A 20% down payment to avoid PMI on a conventional conforming loan would be $140,000. You can use the Rocket Mortgage down payment calculator to estimate closing costs based on several variables.

What credit score is required for a $700,000 home?

The credit score requirements to qualify for a $700,000 mortgage can vary from one lender to another and will depend on the type of loan you choose. Conforming conventional loans no longer require a specific credit score, though lenders will review and consider your overall credit history. FHA loans from Rocket Mortgage require a credit score of 580 with a 3.5% down payment, though other lenders may offer FHA loans to borrowers with a credit score of 500-579 and a 10% down payment.

The bottom line: Expect to pay $4,500 to $5,800 a month for a $700K house

When shopping for a home, ensure that any property you're interested in is affordable based on your income and monthly budget. If you want to buy a $700,000 home, you’ll be looking at a monthly mortgage bill of $4,500 to $5,800, and that's before considering property taxes and homeowners insurance.

If you’re ready to start shopping for a home, apply for mortgage preapproval today with Rocket Mortgage.

¹The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

²To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

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