As Median Sales Prices Hit Record Highs, How Much Would Monthly Payments Be on a $500,000 Home?

You might be surprised at how much the cost of homeownership has risen.

The stock market may be down in 2022, but that hasn’t been the case in the real estate market. In fact, home prices in the United States have never been higher, and many buyers are starting to get priced out of the market. But just how much more expensive is buying a home now than it was just a year ago?

Here’s a rundown of how dramatically the costs of homeownership have risen over the past year, and what it means for someone in the market for a $500,000 home.

Home prices are up and mortgage rates have soared

As of the latest data from Zillow, the median U.S. home price at the end of May 2022 was $349,816. This is an all-time record. It's 20.7% greater than the median home price a year ago. To use round numbers for context, this means that the typical $500,000 home would have cost about $414,250 in May 2021. And this means down payments have risen as well. While there are mortgages with low down payments available, the amount of up-front cash home buyers need has increased significantly.

Also, keep in mind that it isn’t just home prices that are making homeownership less affordable. Borrowing costs have soared as well. As of mid-June 2022, the average 30-year fixed-rate mortgage interest rate was 6.28%, compared to just over 3% a year ago. That’s a huge difference, and as you can imagine, a costly one.

How much will a $500,000 home cost per month?

As of this writing, the monthly payment on a $500,000 home is about $2,471, assuming you use a 20% down payment and get the average mortgage rate on a 30-year loan.

One year ago, not only would the same home have cost $414,250, but the average mortgage rate was less than half of what it was today, resulting in a monthly payment of just $1,397. In other words, the mortgage payment today is 77% higher for the exact same home than it was a year ago. That’s a major difference when it comes to home affordability.

It’s also worth mentioning that these payments are just the principal and interest on the mortgage. It doesn’t include the property taxes and insurance you’ll likely have to pay along with your monthly payments. Since both of those are based on home value, it’s fair to assume they are significantly more costly on average than they were a year ago.

Read more: Mortgage Calculator: PMI, Interest, and Taxes

Will home prices go down anytime soon?

In a nutshell, it is significantly more expensive to become a homeowner than it was a year ago. However, it remains to be seen what effect this will have on the overall real estate market. On one hand, declining home affordability could result in lower demand. On the other hand, rising mortgage rates could make existing homeowners reluctant to sell their homes, resulting in lower supply. So, there could be a slowdown in the market, but whether the supply-demand dynamics will result in lower home prices isn’t quite as clear.