Landing a $700,000 house is an impressive milestone.

But before you start house hunting, consider whether you can handle the monthly bill that comes with it—including all those pesky property costs like insurance and taxes.

This article will cover:

  • The monthly mortgage payment on a $700 000 house
  • Factors the influence mortgage payments
  • How much house you can afford on your income
  • Whether to buy points to lower interest rates

Read on to see if a $700k house is within your budget.

How much would the mortgage be on a $700k house?

Here’s your back-of-the-envelope math.

For a house with a purchase price of $700,000, with 20% down, you’ll need a mortgage of $560,000. The monthly payments, including principal and interest, on a 30-year fixed-rate mortgage at 7% will be approximately $3,725 a month.

With a down payment of just 10% you’ll need a $630,000 mortgage. At an 8% interest rate with the same 30-year term, your total monthly payment increases by about $900 to $4,622.

On a 15-year mortgage with 20% down and a 7% rate, the monthly payment jumps to $5,033.

And a 15-year mortgage with 10% down and an 8% rate, the monthly payment is $6020.

These estimates do not include property taxes or homeowners’ insurance escrow payments that many lenders require. Local tax rates and insurance costs further raise total monthly housing costs.

Property taxes add $250 to $400 per month for a median-priced home, while insurance averages $100 to $300.

In all, on a $700,000 house, total mortgage payments can reach $5,000 or more each month.

What factors determine monthly mortgage payments?

When calculating mortgage affordability and answering the question, “How much is the mortgage payment on a $700,000 house per month?” four key factors dictate your monthly bill:

Down payment amount

The larger your down payment, the lower the loan amount and resulting mortgage payments.

As you saw in the examples above, a larger down payment can make a huge difference when you are calculating the monthly mortgage payments on a $700k house.

Over a 30-year term, every additional 10% of down payment reduces the monthly payments significantly.

Interest rate

Today's 7-8% interest rates drastically exceed the sub-4% historic lows of 2021. Even small rate variations markedly impact mortgage payments.

Every 0.25% rate rise on the principal amount of your loan will boost your monthly payment.

For example, if you’ve put 20% down on a $700k house leaving you with a $560,000 mortgage, every quarter percent of interest will increase your monthly payment by almost $100.

So, in addition to increasing your down payment to lower the amount you’ll need to borrow, shopping for lenders with the best rates can also save you money.

Loan term

The longer the term, the lower the monthly payment because repayment is spread over more years. A 30-year term results in payments 35–40% lower than a 15-year mortgage. But over time you’ll pay more in interest.

Taxes and insurance

Lenders often require escrow account payments to cover property taxes and home insurance. Your specific location and policy rates determine these costs.

On a $700,000 house, taxes and insurance could add $600 or more to your monthly payment. Don’t forget to accurately calculate these when budgeting.

What price house can I afford on my income?

Mortgage lenders follow two simple benchmarks to gauge if you can afford a loan.

First, housing expenses should not exceed 28% of your gross monthly income. Second, total debt payments should not exceed 36% of income.

These ratios determine the maximum affordable home prices and mortgage amounts.

For example, a household earning $150,000 annually has around $12,500 in gross monthly income.

Following the 28% guideline, their maximum monthly housing payment would be $3,500.

On a 30-year mortgage at a 7% rate, this implies a maximum affordable home loan of roughly $565,000—supporting a $700k home purchase price with 20% down.

But, each lender has its own flexibility on debt-to-income limits.

While the 28% guideline is a commonly used benchmark, some lenders may be willing to extend loans to borrowers with higher debt-to-income ratios if they have strong credit histories and stable incomes.

Other factors like qualifying income or down payments may also vary from lender to lender—so shop around.

Should I pay points to lower the interest rate?

Paying discount points upfront when originating a mortgage reduces the interest rate and cuts the monthly payments.

Each discount point (1% of the loan amount) typically lowers the rate by 0.25%. So using the same example of a $700k house with 20% down and a $560,000 mortgage, one point = $5,600, but could shrink the rate from 7.00 % down to 6.75%.

Monthly principal and interest on the lower 6.75% rate mortgage would be about $93 a month less than at 7.00%.

So, in this example, you would break even on the $5,600 point at about the five year mark and start saving after that.

If you stay in the home long term, paying points up front could pay off.

But for a shorter ownership period, adding points may not recoup costs. Crunch the numbers based on your situation.

How to reduce monthly mortgage payments

If the payments on your dream home exceed your budget, consider these options to lower costs:

  • Increase your down payment. Putting down an extra 10% shrinks the mortgage amount and payments substantially.
  • Consider whether you'll be able to refinance at a lower rate in the future. Once you have your loan, refinancing when rates go down can help reduce your monthly payments and potentially save you thousands of dollars over the life of the loan.
  • Shop for the lowest rates. Even a 0.125% variance in rates can save $50+ per month, especially when you are trying to figure out the cost of a mortgage on a $700 000 house.
  • Buy down the rate with points. Paying points upfront reduces interest rates and monthly payments.
  • Choose a longer term. Stretching to a 30-year term from 15 years lowers monthly payments by hundreds.
  • Make an extra principal payment. One additional monthly payment annually saves interest and pays off the loan faster. If you can make that extra payment, include those savings when calculating the affordability of the mortgage on a $700k house.

Mortgage costs on a $700k house in a nutshell

At the current interest rates of 7-8%, a 30-year loan with 10-20% down on a purchase price of $700,000 translate to monthly payments between $3,600 and $4,600 respectively.

Those amounts do not include insurance or property taxes which can add as much as $500 a month.

Before taking the plunge, carefully assess the costs using the 28% and 36% benchmark ratios as a starting guide.

Finally, consider talking to a financial planner. After all, a house isn’t an everyday purchase—in fact, it’s probably the most important purchase you’ll ever make.