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Mortgage Payment at 3 Percent
Use 3 percent here as a what-if rate. The page does not say what any lender offers. It shows what that rate does to a $300,000 loan over 30 years.
At 3 percent the monthly payment on the starting loan is $1,264.81. Total interest over the term is $155,332.
How the payment is worked out
The monthly payment comes from one formula. Multiply the loan by the monthly rate, then divide by one minus the following number: one plus the monthly rate, raised to the negative of the number of payments. For $300,000 at 3 percent over 30 years, the monthly rate is 0.25 percent and there are 360 payments.
Worked example
At 3 percent a $300,000 loan over 30 years costs $1,264.81 a month. The first month includes $750.00 of interest.
A rate one point higher, 4 percent, would cost $1,432.25 a month. A rate one point lower, 2 percent, would cost $1,108.86.
Questions about this calculator
What would one point less than 3 percent save?
Moving to 2 percent lowers the payment by $155.95 a month and saves $56,143 of interest.
Would an extra $100 a month help at 3 percent?
It would end the loan 3 years 4 months sooner and save $19,437 of interest on the example loan.
How does a half point change the payment on $300,000 at 3 percent?
A half point higher raises the payment to $1,347.13. A half point lower reduces it to $1,185.36.
Is a lower rate than 3 percent always better?
Not if it comes with fees or points. A rate one point lower saves $155.95 a month here. Divide the upfront cost by that saving to see how many months it takes to break even.
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This page is for education only and is not financial or tax advice.