A cool half-million dollars might seem like a massive number, but here’s a fun fact: When it comes to home prices, it’s not that far off base. As of March 2025, the average purchase price of a single-family home was $408,500, according to the Federal Reserve Bank of St. Louis. That’s down from 2024 figures, which rang in at $505,750, according to the U.S. Census Bureau (yay). Still, a $500,000 home isn’t far-fetched if you live in a higher-cost-of-living area.
So, what does a $500,000 mortgage payment look like if you’re trying to budget for your first or next home?
The monthly payment on a $500,000 house is $2,918 per month toward your mortgage principal and interest, assuming a 6.75% interest rate and a 30-year fixed term with 10% down. On a 15-year fixed-rate mortgage, your monthly principal and interest payment would be $3,797, assuming 10% down and a 6% mortgage interest rate.
However, the total cost of a $500,000 mortgage goes beyond your monthly P&I payment. Here’s a thorough breakdown of the expenses so you can build a better housing budget.
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How much will a half-mil home cost you in 2025? Your total cost goes well beyond your monthly mortgage payment. Here’s the total cost of principal and interest payments for a mortgage on a $500,000 house, broken down by two popular mortgage loan terms: 30-year and 15-year fixed-rate loans.
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Lifetime cost over 30 years: $1,050,728.92
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Total interest paid: $600,728.92
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Assumes 10% down, 6.75% interest rate
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Lifetime cost over 15 years: $683,524.03
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Total interest paid: $233,524.03
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Assumes 10% down, 6% interest rate
As you can see, there’s quite a bit of cost savings with a 15-year mortgage. These mortgages tend to have lower interest rates than those with 30-year terms. The shorter loan term also means a speedier payoff, significantly reducing your total interest paid. You could save even more on interest if you qualify for a VA or FHA loan, which can have lower interest rates.
Dig deeper: How to get the lowest mortgage rate possible
Your monthly principal and interest payment on a $500,000 mortgage will depend on three main factors: mortgage type, interest rate, and term length. Here’s what your payment might look like each month based on three popular types of mortgages.
Our sample rates start at 6.75% for conventional mortgages, 6.25% for FHA mortgages, and 6% for VA mortgages — this is reflective of the fact that FHA rates are usually lower than conventional ones, and VA rates are typically the lowest of the three.
Note: The mortgage rates below are for illustrative purposes only and don’t indicate a rate you might receive if you apply for a home loan.
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Conventional mortgages are the most common type of mortgage and are available from a variety of lenders, including banks and credit unions.
The Federal Housing Administration insures FHA mortgages, which often have more lenient qualification criteria and lower down payment requirements than conventional loans.
Learn more: The best FHA loan lenders
VA mortgages, insured by the U.S. Department of Veterans Affairs, are available to those who qualify for a Certificate of Eligibility from the Department of Veterans Affairs.
Read more: The best VA mortgage lenders
The costs of a mortgage on a $500,000 house go beyond your monthly principal and interest payment. Owning a home comes with various short- and long-term costs; knowing which costs are common can help you budget and ensure you’re buying a home you can afford.
You’ll run into short-term expenses when you buy your home. These are typically known as closing costs — one-time expenses you’ll pay just before purchase or at closing — and generally run between 2% and 5% of your total loan amount. Some expected costs include:
The most common long-term costs you’ll encounter as a homeowner are your home maintenance expenses, property taxes, and homeowners insurance. You also might have to pay for mortgage insurance or homeowners’ association dues.
Most mortgage payments include escrow payments, which are additional dollars added to your monthly bill that your lender sets aside to pay your property taxes and insurance. Your lender communicates directly with your insurance company and local tax assessor’s office to get accurate figures.
If you have a conventional mortgage and make a down payment that’s less than 20%, you may be required to pay private mortgage insurance (PMI). This insurance, generally ranging from $30 to $70 monthly for every $100,000 you borrow, protects the lender if you default on your loan. For a $500,000 mortgage, that would come to $150 to $350 per month. Once your loan balance reaches 80% of the home’s original value, you can usually stop paying this added cost.
With an FHA loan, you would pay an FHA mortgage insurance premium regardless of your down payment size. The MIP is 1.75% of the loan amount at closing, and then you pay an annual premium (usually split into monthly installments), and the cost varies based on several factors.
Costs for maintenance can vary. General upkeep over time can include plumbing and appliance repairs, a new roof, and different renovations and upgrades to keep a home safe and cozy.
Learn more: What is PITI (principal, interest, taxes, insurance), and how does it affect your mortgage payments?
Whether you have a $500,000 or $5 million mortgage, all mortgages are amortized loans. When you make your monthly payments, those payments get split between the principal and interest. Most of your monthly mortgage payment will go toward interest since your outstanding principal is higher at the beginning of your mortgage term. Over time, however, more and more of your payment will go toward the principal.
Here’s a mortgage amortization schedule on a $500,000 15-year fixed-rate mortgage assuming a 6% rate and 0% down payment to show you how that works. (For the sake of simplicity, we’ll show how it would work if you started making payments at the end of 2025.)
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The minimum income for a $500,000 mortgage is roughly $102,500, assuming a 30-year fixed mortgage with a 6.75% rate and 10% down. This number also assumes you have no other debt. This results in a monthly principal and interest payment of $2,925. Most mortgage lenders want to ensure that a borrower’s monthly housing expenses don’t exceed 28% of gross income.
The monthly cost of a $500,000 mortgage depends on your credit score, down payment, and interest rate. For a well-qualified buyer, the principal and interest payment on a $500,000 30-year fixed-rate conventional mortgage would run roughly $2,594 monthly, assuming 20% down and a 6.75% interest rate. For a 30-year fixed FHA loan, the P&I payment would be roughly $2,971, assuming 3.5% down and a 6.25% interest rate.
Whether you can afford a $500,000 house on a $120,000 salary comes down to how much other debt you have. Lenders often look for a back-end debt-to-income (DTI) ratio that’s 36% or less. You can calculate your back-end DTI ratio by dividing your total monthly debt payments (including your new mortgage payment) by your gross monthly income (before taxes). If the result is higher than 36%, you may need to pay down some debt to make your dream $500,000 home more affordable.
This article was edited by Laura Grace Tarpley
