How Much Does A Mortgage Cost In 2022? A Cost Breakdown

It’s that time of year again. You start receiving those pesky mortgage rate advertisements in the mail or on TV. You may be thinking, “What’s the big deal? I can get a mortgage anytime.” But the truth is, with mortgage rates expected to continue rising, getting a mortgage deal in 2022 is more important than ever. Gharpedia brings you a guide on how much does a mortgage cost, along with tips on how to get best mortgage loan deal.

If you’re in the market for a new home or think you might be able to refinance your existing home (check out this Homestar Finance guide for more info on when you can refinance), now is the time to lock in a great rate on your mortgage. One of the ways you can do this is by keeping tabs on the current mortgage rates. Today, there are platforms that can help with keeping tabs on the mortgage rates in your location. Having this information is the most favourable way to review the best rates and help you make a timely decision.

Before choosing a mortgage, you’ll need to know how much it costs. We’ll be looking at the mortgage cost breakdown in 2022. On top of that, we’ll be giving you tips on how to get the best mortgage loan deal.

Before that let’s understand the factors affecting mortgage rates.

Factors Affecting Mortgage Rates

As you may know, a mortgage is a loan that banks or other financial institutions extend to a borrower to finance the purchase of a home. It is a legal contract between the borrower and the lender, with the home serving as collateral for the loan. Mortgages are generally used for primary residences but can also be used to purchase investment properties and vacation homes.

The mortgage cost is the interest paid to the lender throughout the loan term. This interest rate is determined by several factors, including the borrower’s credit score, the type of loan, the loan’s term, and the loan’s down payment.

01. The Loan’s Terms

Loan's Terms

Mortgage payments are usually made monthly, and the loan is typically paid off for 15 to 30 years. The length of the loan term will affect the total cost of the loan. Shorter loan terms usually have lower interest rates but higher monthly payments. On the other hand, longer loan terms typically have higher interest rates but lower monthly payments.

02. The Loan’s Down Payment

The Loan's Down Payment

The size of the down payment is also one of the factors affecting mortgage rates. Lenders typically require a down payment of 10% to 20% of the home’s purchase price—the larger the down payment, the lower the interest rate and the monthly payments. Additionally, mortgage insurance is required for loans with down payments of less than 20%. Mortgage insurance protects the lender if the borrower defaults on the loan. The cost of mortgage insurance is added to the monthly payment.

03. The Loan Type

The Loan Type

The type of loan affects the cost of the mortgage. Fixed-rate loans have interest rates that stay constant throughout the term of the loan. Interest rates on adjustable-rate loans can fluctuate over time.

Check out our guide on types of mortgages:

04. The Borrower’s Credit Score

The Borrower's Credit Score

The borrower’s credit score affects the cost of a mortgage. Borrowers with higher credit scores usually qualify for lower interest rates. The interest rate can also be affected by the borrower’s employment history, income, and debt-to-income ratio.

Let’s understand how much does a mortgage cost actually.

How Much Does a Mortgage Cost: Mortgage Cost Breakdown in 2022

When you’re ready to buy a home, a mortgage is one of the first things you need to check out. But how much will that mortgage cost you? Here’s a closer look at the average cost of a mortgage in 2022 and some examples of how much you can expect to pay each month.

01. Cost Of Interest Rates

Cost Of Interest Rates

Mortgage costs in the United States are expected to rise in the coming years as interest rates and home prices continue to increase. The average cost of a home is USD$217,000, so a mortgage loan for this amount would be around USD$172,000. The interest rate on a mortgage loan can vary, but it is typically between 3% and 5%. This means that your monthly mortgage payment could be anywhere from USD$539 to USD$917, depending on the interest rate you get.

Mortgage rates are constantly changing, but by the end of 2022, average rates for 30-year fixed-rate mortgages are expected to reach 5.5%. On the other hand, average rates for a 15-year fixed-rate mortgage are expected to reach 4.7% for the year.

Assume that you’re getting a loan amount of USD$250,000. For the 30-year fixed-rate mortgage, a 5.5% interest rate would total to a monthly mortgage payment of USD$1,382, while for the 15-year term, a 4.7% interest rate would accrue to a payment of USD$1,266 each month. Over the life of the loan, the 5.5% interest rate would add up to total interest payments of USD$233,440, while the 4.7% interest rate will set you back $215,360 in interest payments.

02. Cost Of Property Taxes

Cost Of Property Taxes

In addition to the interest payments, borrowers must pay property taxes, homeowners insurance, and private mortgage insurance (PMI). Property taxes and homeowners insurance vary by location but are generally around 1% of the home’s value. PMI is generally 0.5% to 1% of the loan amount and is required for mortgage holders who cast aside less than 20% of the home’s value.

Assuming a 1% property tax rate, 1% homeowners insurance rate, and 0.5% PMI rate, the monthly mortgage payment for a 5.5% loan would be USD$1,482. The monthly mortgage payment for a 4.7% loan would be USD$1,366. With these additions, the 5.5% interest rate would result in total interest and other payments of USD$279,920 over the life of the loan. Meanwhile, the 4.7% interest rate would result in total interest and other payments of USD$259,840.

After understanding the mortgage cost breakdown, you will tempted to apply for mortgage. But before applying do check out these tips on how to get best mortgage loan deal.

How To Get Best Mortgage Loan Deal In 2022

Mortgage costs can add up, but there are ways to save money on your mortgage. With home prices continuing to rise, now is the time to lock in a great rate on your mortgage. But how do you know if you’re getting the best deal possible? Here are a few tips to help you get the best mortgage deal in 2022:

01. Get Your Credit Score In Order

Get Your Credit Score In Order

Your credit score is one of the most important factors lenders look into when considering you for a loan. The higher your credit score, the better interest rate you’ll qualify for. If your credit score is below 720, you may still be able to get a loan, but you’ll most likely pay a higher interest rate. You can get a free credit report online if you need clarification on your credit score. Once you know your credit score, you can take the necessary steps to improve it.

02. Shop Around For The Best Interest Rate

Interest rates vary with each lender, so browsing around to get the best deal is essential. In addition to browsing around for the best interest rate, you should also compare different loan products. Some lenders offer adjustable-rate mortgages (ARMs), while others only offer fixed-rate mortgages.

03. Get Pre-Approved For A Mortgage

Get Pre-Approved For A Mortgage

Once you’ve found a few lenders you’re interested in working with, the next step is getting pre-approved for a loan. A pre-approval will give you a better idea of the price range you can afford and will put you in a better position to negotiate with sellers.

04. Consider A Shorter Loan Term

While a 30-year mortgage is the most common loan term, it’s not always the best option. A shorter loan term, such as a 15 or 20-year mortgage, will have a lower interest rate and save you more money in the long run. However, the shorter loan term will also mean higher monthly payments.

05. Make A Large Down Payment

Make A Large Down Payment

If you have the cash on hand, making a sizable down payment is a great way to reduce the amount of interest you’ll pay over the extent of the loan term. Additionally, a large down payment will help you avoid paying for private mortgage insurance (PMI).


Whether you’re getting a mortgage in 2022 or 2032, one thing is for sure: a home is a major financial investment. If you are considering buying a home soon, it is crucial to start planning for the costs of a mortgage. Factoring the expected rise in mortgage costs into your budget is essential. By understanding how much does a mortgage cost and following the tips in this article, you can be sure that you’ll be in an excellent position to get the best mortgage deal in 2022 and be prepared for the financial responsibility of owning a home.

Before leaving also take a glance at our other articles:

4 Facts (and Myths) About Mortgages That First-Time Buyers Should Know
3 Tips to Ensure Approval from Your Mortgage Lender!

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