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Mortgage Payment at 7.5 Percent
Try 7.5 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 7.5 percent the monthly payment on the starting loan is $2,097.64. Total interest over the term is $455,152.
How the payment is worked out
Lenders use the standard loan formula. The yearly rate of 7.5 percent becomes a monthly rate of 0.625 percent. The term of 30 years becomes 360 payments. The payment is the loan of $300,000 times the monthly rate, divided by one minus one over the growth factor, where the growth factor is one plus the monthly rate, multiplied by itself 360 times.
Worked example
On $300,000 at 7.5 percent the payment is $2,097.64. Month one includes $1,875.00 of interest.
Move the rate up one point to 8.5 percent and the payment becomes $2,306.74. Move it down to 6.5 percent and it becomes $1,896.20. The total interest at those two rates is $530,427 and $382,633.
Questions about this calculator
How does a half point change the payment on $300,000 at 7.5 percent?
A half point higher raises the payment to $2,201.29. A half point lower reduces it to $1,995.91.
Is a lower rate than 7.5 percent always better?
Not if it comes with fees or points. A rate one point lower saves $201.44 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 7.5 percent cost each month?
Moving to 8.5 percent adds $209.10 a month and $75,275 of interest over the loan.
What would one point less than 7.5 percent save?
Moving to 6.5 percent lowers the payment by $201.44 a month and saves $72,518 of interest.
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This page is for education only and is not financial or tax advice.