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Mortgage rates this week for a 30-year fixed loan decreased to 6.72%, down from 6.74% last week.
So what impact does this have on your monthly mortgage payment? And what does this mean for homebuyers?
Here’s the monthly cost of purchasing a typical home today, according to the Realtor.com® mortgage calculator.
Monthly mortgage payment today with a 20% down payment
The typical monthly payment on a median-priced $440,950 home at today’s 6.72% mortgage rate is roughly $2,277. (That’s assuming a 20% down payment and excluding tax and insurance.) Last week, a median-priced home at a 6.74% mortgage rate would have cost homebuyers $2,281 per month—$4 more than what buyers would pay today.
Yet, if you examine the peak mortgage rate of 7.79% in October 2023 and then compare those payments with loan installments today, homebuyers are way better off now than they would have been then.
In October 2023, buyers would have paid $2,537 monthly on a $440,950 home with 20% down, which means homebuyers today can save $260 a month—or $2,988 a year—compared with buying when rates peaked.
Monthly mortgage payment today with a 3.5% down payment
For most borrowers, FHA loans require a 3.5% down payment.
Assuming a 3.5% down payment and excluding tax and insurance, the typical payment at today’s 6.72% mortgage rate on a median-priced $440,950 home is roughly $2,753 per month.
Last week, a median-priced home at a 6.74% mortgage rate would have cost homebuyers $2,759 per month—$6 more than what buyers would pay today.
Nonetheless, mortgage payments at today’s rates on a median-priced home are still a $307-per-month improvement over October 2023, when a median-priced home at a 7.79% mortgage rate would have cost homebuyers $3,060 per month.
Long-term savings over 30 years
When you multiply these monthly savings by 30 years, they add up dramatically.
If you buy a $440,950 house at today’s 6.72% rate with a 20% down payment, you’ll pay a total of $819,720 over the life of a 30-year loan.
If you’d bought that same $440,950 home with 20% down in October 2023, when rates peaked at 7.79%, that loan would end up costing you $913,310.
Total savings over 30 years: $93,590.
Now, let’s turn our attention to FHA loans. If you put down 3.5% on a $440,950 house financed at 6.72% today, you’ll pay $991,080 over the life of the loan.
If you’d put down 3.5% on a $440,950 home in October 2023, when rates peaked at 7.79%, you’d pay $1,101,679.
Total savings over 30 years: $110,599.