Here’s How Much Your Monthly Mortgage Payments Will Fall After the Fed Cuts Rates

Hopeful homebuyers who have been waiting on the sidelines due to high mortgage interest rates may not have to wait much longer as the Federal Reserve is now poised to issue its first cut to their interest rates.

The Fed is poised to cut their federal funds rate by 25 basis points or even half a percentage point. While that does not indirectly affect mortgage rates, it could affect other factors in the financial market that influence borrowing rates. This means mortgage rates, and consequently mortgage payments, could drop lower over time.

To help give you an idea of what monthly payments could look like after the Fed's expected rate cut, we calculated how much you'll likely pay in mortgages depending on a range of home values.

How We Calculated

As of the week ending Sept. 12, the contract rate for the 30-year fixed-term mortgage was 6.2% while the rate for the 15-year term was 5.27%, according to Freddie Mac.

Some experts believe mortgage rates will fall the same percentage points as the Fed's cuts. Assuming the Fed cuts its rates by 25 basis points, mortgage rates would fall to 5.95% and 5.02% for the 30-year term and the 15-year term, respectively. The calculations follow these mortgage rates.

Additionally, the median sale price of a US home was $433,229 as of August 2024, per Redfin. Homes in some metro areas also sold for between $300,000 to $700,000. Our calculations cover homes in this range.

Each calculation accounts for the conventional 20% down payment and does not include other housing costs such as homeowners insurance and property taxes.

How Much Are Monthly Payments Going To Be?

$300,000 Home

• Down Payment (20%): $60,000

• Monthly Payments on a 30-Year Mortgage Term: $1,432.89

• Monthly Payments on a 15-Year Mortgage Term: $1,898.85

$400,000 Home

• Down Payment (20%): $80,000

• Monthly Payments on a 30-Year Mortgage Term: $1,910.52

• Monthly Payments on a 15-Year Mortgage Term: $2,531.80

$500,000 Home

• Down Payment (20%): $100,000

• Monthly Payments on a 30-Year Mortgage Term: $2,388.15

• Monthly Payments on a 15-Year Mortgage Term: $3,164.75

$600,000 Home

• Down Payment (20%): $120,000

• Monthly Payments on a 30-Year Mortgage Term: $2,865.78

• Monthly Payments on a 15-Year Mortgage Term: $3,797.70

$700,000 Home

• Down Payment (20%): $140,000

• Monthly Payments on a 30-Year Mortgage Term: $3,343.41

• Monthly Payments on a 15-Year Mortgage Term: $4,430.65