How much does 1% on your mortgage rate cost?

6 October 2026 · Calcosmo editorial team

One percentage point on your mortgage rate sounds small, but it adds up. On a $400,000 loan over 30 years, a 7% rate costs $263 more per month than 6%. Over the full term that is almost $95,000. Compare scenarios yourself with the mortgage calculator.

Worked example: $400,000 over 30 years

Going from 6% to 7% raises the monthly payment by $263.01 and the total interest by $94,683. At lower rates the gap is a bit smaller: from 3% to 4% it is $223 a month.

A rule of thumb

For a 30-year loan at rates between 5% and 7%, every extra 0.125% (one-eighth of a point, a common quote step) adds roughly $8 per month per $100,000 borrowed. On $400,000 that is about $33 a month for each eighth of a point.

Is it worth buying points?

In the US, lenders often let you pay discount points upfront to lower your rate: one point costs 1% of the loan amount and typically lowers the rate by around 0.25%, though this varies. On $400,000, one point costs $4,000. If it lowers your payment by about $65 a month, you break even after about five years. It only pays off if you keep the loan longer than that.

How to get a lower rate

• Credit score: higher scores get better rates. Paying down card balances before you apply can help.
• Down payment: a lower loan-to-value ratio means less risk for the lender, and often avoids PMI.
• Loan term: 15-year mortgages usually have lower rates than 30-year loans.
• Shop around: rate differences of 0.25% to 0.5% between lenders on the same day are common. Get several official loan estimates.

Interest works for you when you save

The same math works in your favor when you save or invest. The compound interest calculator shows what an extra percent is worth over the years. Want numbers for a smaller loan? Read the monthly payment on a $300,000 mortgage.