What are the monthly payments on a $1 million mortgage now that the Fed has cut rates?

The monthly payments on a $1 million mortgage loan are a lot more affordable for borrowers now that the Fed has cut rates. Javier Zayas/Javier Zayas Photography/Getty Images

The Federal Reserve's long-anticipated rate pivot finally arrived last week, offering some much-needed relief to borrowers. After months of holding its benchmark rate steady, the Fed trimmed its benchmark rate by a quarter-point, bringing it down to a range of 4.00% to 4.25%. This marked the Fed's first rate cut since late last year, signaling that, despite still-high inflation, the central bank is finally ready to shift gears as the economy shows new signs of strain.

The Fed's move had a swift impact on mortgage rates, even before it was formally announced, with 30-year fixed mortgage rates falling to an average of 6.13% — the lowest level in nearly three years and a sharp retreat from the 7%-plus rates that were widely available earlier this year. For borrowers taking on large loans, that shift may be especially meaningful. For example, on a $1 million mortgage, today's rates could translate to significant savings each month compared to what buyers would have faced just months ago.

But what exactly are the monthly payments on a $1 million mortgage now that rates are cut — and how do those payments compare to what you would have paid before the rate cut? Below, we'll detail what those costs look like at today's average rates.

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What are the monthly payments on a $1 million mortgage now that the Fed has cut rates?

If we're calculating the payments on a $1 million 30-year fixed-rate mortgage loan with a rate of 6.13%, the principal and interest payment comes to $6,079.34 per month. It's worth noting, though, that this figure doesn't include property taxes, insurance or private mortgage insurance. That $6,000-plus amount is just the baseline mortgage payment. So, borrowers should expect their monthly costs to increase when accounting for those costs. 

Back in January 2025, when 30-year fixed-rate mortgages averaged about 7.04%, that same $1 million loan would have cost $6,679.91 per month. That means borrowers could save about $600 every month at today's rates, or roughly $7,200 per year, compared to what they would have paid earlier in the year.

Over the full 30-year life of the loan, the potential savings may be even more impressive. Borrowing at today's 6.13% rate would save a homeowner more than $200,000 in total interest costs compared to the average 7.04% rate from January. Those kinds of long-term savings help underscore how borrowing at the right time, and at the right rate, can make such a substantial difference in the cost of your mortgage loan.

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How much would it cost to refinance a $1 million mortgage at today's rates?

Homebuyers aren't the only ones who may benefit from the recent rate shift. Current homeowners could also see some big benefits from refinancing their mortgage loans now that the Fed has shifted rates. Whether or not it makes sense to do so depends on your financial goals and timeline, of course, but here's what the math looks like when refinancing at today's average rates:

• 15-year refinance at 5.57%: At today's average 15-year mortgage loan refinancing rates, the monthly payments would be $8,208.03 on a $1 million mortgage refi. While that equates to a bigger payment commitment each month, the shorter loan term builds equity quickly and slashes total interest paid. This path often appeals to homeowners in their peak earning years who want to be mortgage-free by retirement.
• 30-year refinance at 6.39%: When calculated at today's average 15-year mortgage loan refinancing rates, the monthly payments would be $6,248.51. This option keeps monthly costs lower while still locking in meaningful savings compared to loans originated when rates were higher. It also preserves cash flow for other financial priorities like retirement savings or college tuition.

The bottom line

Last week's Fed rate cut has already filtered into the housing market, with 30-year fixed mortgage rates sliding to about 6.13%, the lowest level in nearly three years. For a $1 million mortgage, that translates into monthly savings of more than $600 compared to the rate environment at the start of the year. Over the life of the loan, it could mean more than $200,000 in interest savings.

For buyers, this improved affordability expands purchasing power in the higher end of the housing market. For current homeowners, refinancing opportunities look more attractive than they have in years. And with the Fed signaling that more cuts may be on the way before this year is over, there's reason to believe these conditions could improve further. For qualified borrowers ready to act, though, today's market offers one of the most favorable windows we've seen recently.