Last updated: October 5, 2026 · The rates below are examples, not today’s market rates.
One percentage point sounds small. On a mortgage you will pay for 30 years, it is one of the most expensive numbers in your life. Here is exactly what 1% costs, per month and over the full loan, so you can decide how hard to shop for a better rate.
What 1% costs on a $300,000 loan
| Rate | 30-year monthly P&I | 30-year total interest | 15-year monthly P&I | 15-year total interest |
|---|---|---|---|---|
| 5% | $1,610.46 | $279,767 | $2,372.38 | $127,029 |
| 6% | $1,798.65 | $347,515 | $2,531.57 | $155,683 |
| 7% | $1,995.91 | $418,527 | $2,696.48 | $185,367 |
| 8% | $2,201.29 | $492,466 | $2,866.96 | $216,052 |
Going from 6% to 7% on a 30-year loan adds $197.26 per month and about $71,012 in total interest. From 7% to 8% adds another $205.38 per month and about $73,939. On a 15-year loan, the same 1% jump costs about $29,684 to $30,685 over the term, still a large amount, but less because the money is borrowed for half as long.
How the cost scales with loan size
| Loan amount | Payment at 6% | Payment at 7% | Extra per month | Extra interest over 30 years |
|---|---|---|---|---|
| $200,000 | $1,199.10 | $1,330.60 | $131.50 | $47,341 |
| $300,000 | $1,798.65 | $1,995.91 | $197.26 | $71,012 |
| $400,000 | $2,398.20 | $2,661.21 | $263.01 | $94,683 |
| $500,000 | $2,997.75 | $3,326.51 | $328.76 | $118,354 |
A handy rule: in this range, every 1% adds about $65 to $66 per month per $100,000 borrowed on a 30-year loan.
Why a higher rate also slows your equity
A higher rate does not just raise the payment. It also means a bigger share of each early payment goes to interest. After five years, the $300,000 loan at 6% has a balance of about $279,163; at 7%, it is about $282,395, even though the 7% borrower paid more every month. Our guide on how mortgage amortization works explains why.
What 1% means for how much house you can afford
Because the payment rises, a higher rate shrinks your budget. If $1,800 a month for principal and interest is your limit, it supports a loan of about $300,000 at 6% but only about $270,500 at 7%. See how much house you can afford for the full budgeting method.
How to get a lower rate
- Shop several lenders. Rates and fees differ between lenders on the same day for the same borrower. Compare Loan Estimates side by side.
- Improve your credit score before applying. Paying down card balances and fixing errors on your credit report can move you into a better pricing tier.
- Make a larger down payment where possible; lower loan-to-value ratios often get better pricing.
- Consider a shorter term. 15-year loans usually have lower rates. Compare in 15-year vs. 30-year mortgage.
- Weigh discount points. Paying upfront can lower the rate; see whether points are worth it.
If you already have a higher rate
You are not stuck. Extra principal payments reduce the interest you pay at any rate (see how extra payments change your schedule), and if rates fall, refinancing may make sense once the savings outweigh the closing costs.
Plug in your own loan amount and compare rates in our mortgage calculator.
Frequently asked questions
How much does a 1% higher mortgage rate cost?
On a $300,000, 30-year loan, going from 6% to 7% raises the monthly payment by $197.26 and adds about $71,012 in interest over the full term.
How much does 1% change the monthly payment per $100,000?
At rates between 6% and 7%, each extra percentage point adds roughly $65 to $66 per month for every $100,000 borrowed on a 30-year loan.
Is it worth refinancing to lower my rate by 1%?
It can be, but compare the closing costs with your monthly savings to find the break-even, and remember a new 30-year loan restarts your amortization schedule.
How can I get a lower mortgage rate?
Improve your credit score, make a larger down payment, keep your debt-to-income ratio low, compare offers from several lenders and consider whether paying discount points makes sense for you.
Sources: Freddie Mac Primary Mortgage Market Survey (historical rate data); CFPB: Buying a House. Calculations by ToolStackIA.
This article is for educational purposes only and is not financial advice. Loan programs, rates and rules change; confirm details with your lender or a HUD-approved housing counselor.