What's the Mortgage Payment on a $1M House?

Based on our standard assumptions*, which include putting 5% down, the estimated monthly mortgage payment on a $1M house would be $7,905. However, a lot can impact the cost of a mortgage, and the actual figure will vary from borrower to borrower.

Let’s cover some of the most critical factors and how they could affect the monthly cost of a $1M home.

What Affects the Monthly Payment on a $1M House?

Before we discuss the factors that impact the true monthly cost of a $1M house, it's essential to understand what’s typically included in your monthly payment:

• Principal & Interest

• Property Taxes

• Homeowners Insurance

• Mortgage Insurance (if applicable)

• Homeowners Association Dues (if applicable)

Homeowners association fees may not be included as part of the payment to your loan servicer. However, you should still account for them in your monthly expenses. Although taxes and insurance premiums generally are included, the same advice applies if you qualify for an escrow waiver.

Apart from these costs, which can depend on the property you're buying, other factors that will significantly impact your monthly payment include the:

• Interest rate that you qualify for

• Size of your down payment

• Term of the loan you choose

Interest Rates

Lenders quote interest rates based on how risky they measure a loan. Your credit score has the most significant impact on the rate you receive. However, it's also affected by things like your debt-to-income ratio and the size of your down payment.

The interest rate we used for our estimated payment of $7,905 is 6.922% – the average 30-year rate per the Mortgage Research Center rate tracker at the time of writing. That's just the average, however. Two borrowers could apply for the same $1M mortgage and qualify for drastically different interest rates and monthly costs.

Here are varying rates and how they could affect the total estimated payment on a $1M house. The following include estimated taxes, insurance, and mortgage insurance.

Down Payment

It’s intuitive that the more money you put down, the less you’ll need to finance and the lower your $1M house payment will be. But beyond this, a larger down payment can qualify you for a better interest rate with an even lower monthly cost.

Plus, if you can put 20% down, you can avoid paying for mortgage insurance and cut your payments even further.

It's possible, however, to buy a $1M house with 0% down, although most buyers will need between 3% and 5%. We'll review different loan options toward the end of this article. We assumed 5% down for our estimated payment of $7,905.

Here's an idea of potential monthly payments based on putting a different amount down.

Keep in mind that not everyone will be able to put just 5% down on a $1 million home. You must:

1. Buy a home in an area with increased conforming loan limits of at least $950,000. Some examples include Washington, D.C., Seattle, Wash., and Los Angeles, Calif., or,

2. Find a jumbo loan offering a 5% down option

If neither of these apply, you may need 10% down.

Loan Term

So far, we've been discussing monthly costs relative to a 30-year mortgage – the most popular length for a home loan. However, buyers with a little wiggle room in their budget may want to consider a shorter term.

Your payments will be larger, but shorter-term loans generally have lower interest rates. Plus, repaying your mortgage sooner can save massive amounts of interest across the life of the loan. In our estimated calculation of a 30-year loan at a rate of 6.922%, you'd pay a total of $1,307,447 in interest.

Here's what the monthly payment on a $1M house might look like by shortening your term. We’ll also show how much you could expect to pay in interest over the entire loan.

Property Taxes

Property taxes vary by location, meaning that in some areas, buying a $1M house could result in facing a different tax rate than an alternative property just a short distance away. If you live somewhere with a considerable tax difference between local communities, it may be worth weighing into your figures.

Our estimated monthly cost of $7,905 is based on an annual tax rate of 1% of the home's value. Here's an idea of how lower and higher tax rates could impact your loan payments.

What Types of Loans Are Available for a $1M House?

The loans available to buy a $1M house will depend on where you live. In 2024, 110 locations in the United States are designated as high-cost areas. In these markets, you can get a $1 million conventional loan. You may also be able to get an FHA or VA mortgage for a $1M house.

Outside of these high-cost-of-living areas, you'll probably need a jumbo mortgage unless you're making a large down payment or are eligible for a VA loan.

Conventional Mortgage

In most areas of the country, the 2024 maximum limit for a conventional mortgage on a single-family home is $766,550. This means that without a down payment of around 25% (the limit is for the loan, not the home’s value), you would need to borrow more than conventional lenders allow.

However, the Federal Housing Finance Agency has designated 110 places in the United States as having a high cost of living. Homebuyers can get a conventional mortgage as high as $1,149,825 in these markets.

You can check the conforming loan limits in your area with the Fannie Mae AMI Lookup tool.

First-time homebuyers may be able to get a $1M conventional mortgage for just 5%. Fannie Mae and Freddie Mac do not allow 3%-down mortgages over the conforming limit, currently $766,550.

Conventional purchase loans with less than 20% down require you to pay for private mortgage insurance.

FHA Mortgage

FHA loan limits are generally lower than those of conventional mortgages. In most areas of the United States, FHA loans are limited to $498,257 for 2024. However, FHA limits for high-cost areas jump up to $1,149,825.

If the $1M house you're purchasing is eligible for an FHA mortgage, you can buy with as little as 3.5% down.

FHA mortgages can be an attractive option for borrowers with lower credit scores who may find easier approval and better rates than a conventional mortgage. However, well-qualified borrowers and those planning to make a sizable down payment are likely better off going with a conventional loan.

VA Mortgage

If you have eligible military service, here's some excellent news: VA loans have no maximum limit anywhere in the United States. If you have the income to support the payments on a $1M house, you're well on your way toward getting a loan. Just check with your lender: some impose their own VA lending limits.

VA mortgages come with a funding fee, but no mortgage insurance is required – even with 0% down, which is an option with a VA loan. Even better, VA interest rates are typically lower than comparable conventional loans.

Jumbo Mortgage

If you don't live in a high-cost area, cannot put 25% down, and don't qualify for VA, you'll probably need a jumbo loan. Jumbo loans are any mortgage above conforming lending limits.

Unlike conventional mortgages, no industrywide guidelines dictate the rules for jumbo programs. Each lender creates their own requirements and restrictions. However, you'll likely need a higher credit score, a better debt-to-income ratio, and more reserve funds than a conventional mortgage.

Jumbo mortgages generally require at least 10% down, although finding companies willing to loan with less may be possible.

Can I Afford the Payment on a $1M House?

Even if you’re confident in your ability to afford the payment on a $1M house, lenders have their own criteria for qualifying borrowers based on their income and other existing debts. If you’re ready to purchase and want to know exactly how much home you can qualify for and at what monthly cost, check today's best rates and apply with a reputable lender for a personalized quote.

Methodology

*Unless otherwise noted, the estimates in this article are based on a 30-year fixed-rate conventional mortgage with an interest rate of 6.922% and a down payment of 5%. Monthly payments include property taxes, equal to 1% of the home value annually, and a monthly homeowners insurance premium of $500. All mortgage insurance rates are based on MGIC premiums for a credit score of 760.