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Mortgage Payment at 4 Percent
Try 4 percent on a $300,000 loan over 30 years. The page uses that rate as its starting point. Replace it with the rate you are offered.
At 4 percent the monthly payment on the starting loan is $1,432.25. Total interest over the term is $215,609.
How the payment is worked out
A level payment loan has a neat rule behind it. Each month the interest is the balance times 0.3333 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 4 percent the payment is $1,432.25. Month one includes $1,000.00 of interest.
Move the rate up one point to 5 percent and the payment becomes $1,610.46. Move it down to 3 percent and it becomes $1,264.81. The total interest at those two rates is $279,767 and $155,332.
Questions about this calculator
What would one point less than 4 percent save?
Moving to 3 percent lowers the payment by $167.43 a month and saves $60,276 of interest.
Would an extra $100 a month help at 4 percent?
It would end the loan 3 years 6 months sooner and save $28,747 of interest on the example loan.
How does a half point change the payment on $300,000 at 4 percent?
A half point higher raises the payment to $1,520.06. A half point lower reduces it to $1,347.13.
Is a lower rate than 4 percent always better?
Not if it comes with fees or points. A rate one point lower saves $167.43 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.