The monthly payment for a mortgage is primarily determined by the loan amount, interest rate, and loan term. For an $850,000 loan, assuming a 20% down payment of $170,000, the calculations vary depending on the interest rate and term.
For example, with an interest rate of 6.68% on a 30-year fixed mortgage, the monthly payment excluding taxes and insurance would be approximately $5,493. This estimate is based on principal and interest alone, with the rate reflective of today’s averages for conventional loans
Current mortgage rates
The mortgage rates from November 29 to December 29 for as follows;
| Loan Type | Purchase | Refinance |
| 30-Year Fixed | 6.68% | 6.96% |
| FHA 30-Year Fixed | 6.72% | 6.29% |
| VA 30-Year Fixed | 6.09% | 6.17% |
| 20-Year Fixed | 6.54% | 6.68% |
| 15-Year Fixed | 5.84% | 5.81% |
Therefore the mortgage rates for $850,000 is;
- 30-year fixed mortgage rate, the interest rate is 6.68%.
- 15-year fixed mortgage rate, the interest rate is 5.84%.
However, these rates can vary based on factors such as your credit score, loan-to-value ratio, and lender terms.
Monthly payments for an $850,000 mortgage
With a 20% down payment
Assuming a standard 20% down payment of $170,000, the loan amount would be $680,000. Monthly payments would depend on the term and interest rate:
- 30-year fixed mortgage at 6.68% APR:
- Monthly payment: Approximately $5,493
- 15-year fixed mortgage at 5.84% APR:
- Monthly payment: About $6,976
The shorter loan term results in higher monthly payments but less interest paid overall​.
Lower down payment
If a buyer cannot make a 20% down payment, private mortgage insurance (PMI) costs must be included. PMI can range between 0.5% and 1% of the loan annually, adding up to $283–$566 per month until 20% equity is achieved​.
Impact of interest rate changes
Even slight shifts in mortgage rates can greatly affect monthly payments. For example:
- A 0.25% decrease in the interest rate for a 30-year mortgage could reduce the monthly payment by about $30 for every $100,000 borrowed​.
- A drop from 7.03% to 6.5% on a 30-year loan for $850,000 could save buyers approximately $350–$400 per month​.
Additional costs to consider
Taxes and insurance
- Property taxes: Typically range from 0.8% to 1.2% of the home’s value annually. For an $850,000 home, this equates to $6,800–$10,200 per year.
- Homeowners insurance: Costs around $1,200–$2,500 annually, depending on location and coverage needs​.
Flood insurance
Required for homes in flood-prone areas, premiums vary widely based on FEMA’s flood zone maps.
HOA fees
If applicable, Homeowners Association fees could add $200–$500 per month.
How to prepare for an $850,000 mortgage
- Monitor rates: Mortgage rates fluctuate daily. Lock in a favorable rate when possible.
- Improve your credit score: Better credit can reduce your interest rate, saving thousands over the loan’s life.
- Budget for closing costs: These can add up to 2%–5% of the home’s value, or approximately $17,000–$42,500.
- Use a mortgage calculator: Online tools can help estimate payments, including taxes and insurance​
