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Mortgage Payment at 3.5 Percent
Pick this page when you want to see a 3.5 percent rate at work. The loan is $300,000 over 30 years and every box can be changed.
At 3.5 percent the monthly payment on the starting loan is $1,347.13. Total interest over the term is $184,968.
How the payment is worked out
A level payment loan has a neat rule behind it. Each month the interest is the balance times 0.2917 percent. The payment is set so that after 360 months the balance lands exactly at zero. Solving for it on $300,000 gives the loan times the monthly rate, divided by one minus one over one plus the monthly rate raised to the power of 360.
Worked example
On $300,000 at 3.5 percent the payment is $1,347.13. Month one includes $875.00 of interest.
Move the rate up one point to 4.5 percent and the payment becomes $1,520.06. Move it down to 2.5 percent and it becomes $1,185.36. The total interest at those two rates is $247,220 and $126,731.
Questions about this calculator
How does a half point change the payment on $300,000 at 3.5 percent?
A half point higher raises the payment to $1,432.25. A half point lower reduces it to $1,264.81.
Is a lower rate than 3.5 percent always better?
Not if it comes with fees or points. A rate one point lower saves $161.77 a month here. Divide the upfront cost by that saving to see how many months it takes to break even.
How much would one point more than 3.5 percent cost each month?
Moving to 4.5 percent adds $172.92 a month and $62,252 of interest over the loan.
What would one point less than 3.5 percent save?
Moving to 2.5 percent lowers the payment by $161.77 a month and saves $58,238 of interest.
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This page is for education only and is not financial or tax advice.