Buying a home can be expensive, especially if you want to live in an area with high property values. Knowing how much your mortgage will cost you each month is essential in determining whether or not your budget will allow you to buy your dream home. In this article, we’ll go over how much $105,000 will actually cost you per month as well as other financial considerations when buying a new home.

## The average U.S. home price

The average U.S. home price is around $350,000 so your monthly mortgage payment would be around $1,167. If you had a 30-year fixed-rate mortgage at 4% interest with an 85% loan-to-value ratio (meaning you put 15% down), your monthly payments would be around $938 per month. The difference in the cost of your monthly mortgage comes from the interest rate and how much money you put down on the house upfront.

## Average monthly mortgage payments

The monthly mortgage payment for a home worth $105,000 will be about $1,260. Although the average monthly mortgage payments range between an individual’s income and location (i.e., urban versus rural), this number is based on the 28/36 rule of thumb – which states that your monthly housing expenses should not exceed 28% of your gross income. For someone making $100,000 per year, their monthly housing expense would be around $2,800 per month.

## First time home buyer options

The average first time home buyer spends about 9% of their monthly income on mortgage payments. Purchasing a $105,000 house would result in an approximate monthly payment of $1,400/month. This assumes that the borrower has good credit and would qualify for a low down payment FHA loan with 25-year amortization. Of course other loans will have different rates and monthly payments but this should give you a general idea of what to expect.

## Estimated taxes and insurance costs

The monthly costs of mortgages depend on the total amount borrowed and where you live. The total cost also includes estimated taxes and insurance. If you borrow $100,000 to buy a home at current rates, your monthly payment would be around $575 with an annual percentage rate (APR) of 4.125%.

That number will change depending on how much you borrow and the location. In most areas, if you’re borrowing less than $300,000, interest only payments are possible. But in order to avoid paying private mortgage insurance (PMI), borrowers need a 20% down payment for homes costing over $500,000.

To avoid PMI completely for properties costing up to about $475,000 in most areas of the country, borrowers need 10% down payments.

## Total cost of homeownership

It may be helpful to use an amortization calculator to calculate the total cost of homeownership. You can enter the amount of your down payment, the term length (number of years), interest rate and any points or fees you’re willing to pay.

This will tell you what your monthly payments will be for each month of the loan. Once this information is calculated and averaged out over 30 years, it will show what percentage of your income would go towards housing expenses.