What a $400,000 home loan could cost at current rates

If you do not have enough cash for a large down payment, you may need a mortgage of $400,000 or more to buy a home in the current housing market.

That leads to two key questions for would-be buyers: What would a $400,000 mortgage cost each month, and could you truly afford it?

What would a $400,000 mortgage cost each month?

For this example, the focus is on the amount borrowed from a lender, not the purchase price of the home. No matter what the house costs, assume you are taking out a $400,000 mortgage.

Borrowers have several term options, but the 30-year fixed-rate mortgage remains the most common. To estimate the payment, that loan term provides a useful benchmark.

The national average rate for a 30-year fixed mortgage was 7.18% as of the latest available Freddie Mac data.

Still, principal and interest are only part of the total monthly bill.

Remember the added costs of owning a home

In addition to the mortgage itself, homeowners typically pay for insurance, mortgage insurance, and property taxes each month. It is also wise to account for potential repair expenses and homeowners association dues if the property is in an HOA community.

These expenses are often called the hidden costs of homeownership. They are not really hidden, but many first-time buyers fail to include them when figuring out what they can afford.

When evaluating whether a home is within reach, all of these costs should be included. They can raise your monthly housing bill substantially.

According to Zillow research, the typical American homeowner spends $1,380 per month on maintenance, property taxes, and insurance. Maintenance was the most expensive hidden cost in every metro area Zillow studied.

That figure offers a general sense of what a $400,000 mortgage might involve, but it is not a universal number. Your exact payment will depend on your mortgage rate, property tax rate, and other personal details.

Could you comfortably handle a $400,000 mortgage?

The next step is deciding whether the payment fits your budget. The question is not only whether you can manage about $4,115 a month, but whether you can do so comfortably.

If housing costs leave you with very little left to save, invest for retirement, or enjoy everyday life, you could become “house poor.” That means too much of your income is tied up in homeownership, leaving little room for other financial goals.

If a $400,000 mortgage at current rates would stretch your budget too far, consider a lower-priced home or look into down payment assistance to reduce how much you need to borrow.