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Reduce Your Monthly Mortgage Payments by Increasing Your Down Payment
01/01/01
The size of your mortgage payment depends on two factors – the interest rate and how much you borrow. There is little you can do to lower the interest rate. However, you can reduce your mortgage payment by making a larger down payment. Using an automatic savings plan is the simplest way to build your down payment.
Here is a simple chart showing the effect of a larger down payment on a $250,000 home.
Cost of the home |
Down payment |
Mortgage Amount |
Monthly payment |
$250,000 |
$25,000 |
$225,000 |
$1,497 |
$250,000 |
$50,000 |
$200,000 |
$1,331 |
$250,000 |
$65,000 |
$185,000 |
$1,231 |
$250,000 |
$75,000 |
$175,000 |
$1,164 |
$250,000 |
$100,000 |
$150,000 |
$ 998 |
(Assumes an interest rate of 7% and a 30-year amortization.)
You may already have some savings, but developing a disciplined saving habit can help you grow those savings, boost your down payment, and lower your monthly mortgage payments.
Here are some examples of how little you need to save monthly to add to those savings.
Increase your savings by |
Over 6 months |
Over 12 months |
Over 18 months |
Over 24 months |
Over 30 months |
Over 36 months |
$10,000 |
$1,656 |
$822 |
$544 |
$405 |
$321 |
$266 |
$15,000 |
$2,484 |
$1,233 |
$816 |
$607 |
$482 |
$399 |
$25,000 |
$4,141 |
$2,055 |
$1,360 |
$1,012 |
$804 |
$665 |
$35,000 |
$5,797 |
$2,876 |
$1,903 |
$1,417 |
$1,125 |
$930 |
$50,000 |
$8,281 |
$4,110 |
$2,719 |
$2,024 |
$1,607 |
$1,329 |
(Assumes a 3% earnings rate.)
Start Your Automatic Savings Today
There is no easier way to save than with an automatic savings plan. If you already use direct deposit for your paycheck, have your financial institution transfer the amount each month. You can also ask your employer to deduct the amount each month and deposit it into the account of your choice.
Ready to explore how Sunflower Bank can assist you? Speak to a personal banker at a branch near you, contact a specialist on our Private Wealth team, or find the right financial partner on our Commercial Banking team for your business needs.
This article contains general information only. Sunflower Bank, N.A. is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. It is not meant as a substitute for such professional advice or services. Before making any decisions related to these matters, you should consult a qualified professional advisor. Investment and insurance products are not FDIC-insured, are not a deposit or other obligation of, or guaranteed by the bank or an affiliate of the bank, are not insured by any federal government agency and are subject to investment risks, including possible loss of the principal amount invested.