If you’re thinking about getting a $350,000 mortgage, it’s important to calculate upfront costs, closing fees, and your monthly payments first. That way, you’ll know exactly what you’re getting and whether it fits into your budget.
You may also want to compare different lenders and loan types to determine eligibility requirements and what steps are involved. This will also give you a good idea of whether now is the right time to apply for a loan of this size.
- What to consider before applying for a $350,000 mortgage
- Monthly payments for a $350,000 mortgage
- Where can you get a six-figure mortgage?
- Steps to get a $350,000 mortgage
- Frequently asked questions
What to consider before applying for a $350,000 mortgage
Before you apply for a $350,000 mortgage, it’s important to be aware of the additional costs that come with it. Consider the following key factors:
- Monthly payment: In addition to your $350K loan amount, your payments will depend on your annual percentage rate (APR) and the length of your loan term. Longer repayment terms come with smaller monthly payments but more interest paid over time, while shorter terms mean higher monthly payments but less interest paid overall.
- Down payment amount: The larger the down payment, the smaller your overall loan and monthly payments will be. If you put at least 20% down, you’ll be able to avoid having to get private mortgage insurance (PMI).
- Term length: Most mortgage loans, including $350,000 mortgages, come with either 15- or 30-year terms. The term length will affect how much interest you’ll pay and the size of your monthly payment.
- Upfront costs and closing fees: Home loans typically come with additional costs like application fees, appraisal and inspection fees, insurance fees, and title search fees. You may also be responsible for closing costs or paying part of your real estate agent’s commission. Closing costs generally range from 2% to 5% of your loan amount.
- Eligibility requirements: Usually, you’ll need a good credit score (a FICO score of 670 or higher) to qualify for a $350K mortgage, especially if you want the best rates. Lenders may also require proof of income and other assets.
- Interest rate: Home loans often have fixed rates that don’t change over the life of the loan. The interest rate you’ll qualify for will be largely determined by your credit score, the size of your down payment, the amount you borrow, and the length of your loan term. Keep in mind that shorter-term loans typically come with lower interest rates.
How much interest you’ll pay over the life of your loan will vary depending on your principal balance, interest rate, and the length of your loan term.
Here’s an example of what you’d pay on a $350,000 mortgage depending on your interest rate and loan term:
| Principal loan balance | Loan term | Interest rate | Monthly payment | Total interest charges | Total loan cost |
|---|---|---|---|---|---|
| $350,000 | 30 years | 6.65% | $2,247 | $458,876 | $808,875 |
| $350,000 | 15 years | 5.89% | $2,933 | $177,893 | $527,893 |
Monthly payments for a $350,000 mortgage
A $350,000 mortgage payment will typically include the following:
- Principal: This is the amount you borrow or currently owe on your home loan. When you first start repaying your loan, only a small percentage will go toward the principal balance.
- Interest: This is a percentage of your loan amount that you’ll pay your lender each month. At first, most of your monthly payment will go toward interest. As you pay down the loan, you’ll pay less in interest and more toward the remaining principal balance.
- Insurance and taxes: Property taxes and homeowners insurance can increase your monthly payment. If you put less than 20% down, your lender might also add PMI to your monthly payments until you have enough home equity to remove it. Some lenders will require that you pay money into a separate escrow account for insurance and taxes.
- Other fees: Depending on where you live, you might have to pay homeowner’s association (HOA) fees each month.
Even if you qualify for a $350,000 mortgage, that doesn’t necessarily mean you should apply for one. Before taking out a loan, calculate how much mortgage you can reasonably afford based on your budget.
Here’s an idea of what you might have to pay each month on a $350,000 mortgage with a 15- or 30-year term:
| Mortgage term | Loan amount | APR (annual percentage rate) | Monthly payment |
|---|---|---|---|
| 15-year fixed | $350,000 | 5.89% | $2,933 |
| 30-year fixed | $350,000 | 6.65% | $2,247 |
A good way to measure if you can afford your mortgage payments is to factor them into your debt-to-income (DTI) ratio. This is the percentage of your monthly income that goes toward paying off debt, like car payments, credit cards, or child support.
Mortgage lenders typically like to see a DTI no higher than 43%. If your DTI is too high, lenders may assume that you’ll have trouble affording your new loan payment.
When to consider a smaller mortgage
A $350,000 mortgage isn’t for everyone. Here are a few instances when it might make sense to get a smaller loan:
- The monthly payment is too high. If the mortgage payment is higher than you can afford, you might be better off with a smaller home loan.
- You’d be happy with something smaller. If you find a more affordable home that still meets your needs, you might find that a $350,000 house isn’t necessary. A less expensive home may also come with lower property taxes.
- It doesn’t fit into your goals. Taking out a large home loan could delay certain long-term goals like retirement, paying off debt, or saving up for a family vacation.
- Your income fluctuates. If you’re self-employed or plan to change jobs in the near future, going with a smaller mortgage could offer you more flexibility.
- You’re still building credit. It might be better to wait or take out a smaller home loan if your credit score isn’t where you want it to be. Your credit history has a big impact on your interest rate, loan amount, and approval odds.
Where can you get a $350,000 mortgage
You can get a $350K mortgage from traditional lenders — like banks and credit unions — or through a private online lender. Keep in mind that if you apply with a credit union, you may need to be a member first.
Eligibility requirements, rates, and repayment terms will vary depending on the lender, so it’s a good idea to shop around to make sure you find the right loan for you.
Steps to get a $350,000 mortgage
If you’re ready to get a $350K mortgage, follow these ten steps:
- Determine what you can afford. Before you start searching for a home, it’s wise to calculate what you can afford. Review your monthly income and expenses to see if you’ll have enough cash left over for a monthly mortgage payment.
- Start saving. Set aside money for a down payment and any other upfront or closing costs. Having extra cash will also come in handy should an unplanned expense (like home repairs) arise.
- Check your credit report. You can get a free copy of your credit report from each of the three main credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. Review it for any errors, like incorrect late payments or closed accounts reported as open, and dispute them with the appropriate bureau to potentially boost your score.
- Compare lenders and loan options. Shop around and compare multiple lenders and loan options to make sure you find the best loan for your unique financial situation. Consider eligibility requirements, APRs, and any additional fees the lender charges.
- Get pre-approved. Once you’ve selected a lender, it’s a good idea to get pre-approved. This will determine how much you’re eligible to borrow based on your credit score, income, assets, and other factors of your financial profile. Plus, getting pre-approved shows lenders that you’re serious about buying.
- Gather the appropriate documents. Having the necessary paperwork prepared can streamline your application process. You’ll likely need to provide a government-issued ID, recent W-2s or tax returns, bank statements, and proof of assets.
- Select a loan type. Several types of home loans exist, including conventional loans, FHA loans, VA loans, and USDA loans. Eligibility and down payment requirements will vary depending on the type of loan you choose.
- Choose a repayment term. Make sure to select a loan term that will both fit into your monthly budget and allow you to meet your long-term financial goals. Keep in mind that longer terms mean smaller monthly payments but more interest paid over time, while shorter terms mean larger monthly payments but you’ll pay less interest costs overall.
- Submit the loan application. Once you’ve found a home and selected a lender, fill out the application and wait for approval. The lender might request additional documents to help with their decision.
- Close on the loan. If your loan application is approved, you’ll sign final documents and pay for any closing costs. Once the closing process is complete, that’s it — you now own a home!
Frequently asked questions
Should I get a 15-year or 30-year mortgage?
This depends on your financial situation and your goals for paying off your mortgage. Shorter loan terms typically mean higher monthly payments, but can be cheaper in the long run. Longer terms come with smaller monthly payments, but cost more in interest over time.
What is a good credit score for a mortgage loan?
With a conventional mortgage, you’ll typically need a minimum credit score of 670 to qualify. Some loans, like FHA loans, have more relaxed credit score requirements — 580 with 3.5% down. The better your credit score, the better your terms and rates will be.
When should you refinance a $350,000 home loan?
It may be time to refinance your home loan if you’re looking for a lower monthly payment or better interest rate. You could also refinance a 30-year loan for a shorter term. It typically makes the most sense to refinance when you can get a lower interest rate than you’re currently paying.
