When you buy a house, your first mortgage payment is due on the first of the next month, and can vary based on when you close. Buying a home is a complicated process, especially if you’re juggling moving into a new home with selling an old one. You have to budget for and organize payments to everyone from home inspectors to moving companies, and that’s before you start paying the bank back for your mortgage.
Budgeting for a number of expenses during the house hunting-process is one thing, but it’s even more important to budget for your new mortgage payment, especially if you have other outstanding debts — like a few final months of rent from a lease you can’t break. Preparing for a new mortgage payment comes down to knowing when it’s due and how much you owe every month.
Most of the time, your first mortgage payment comes due on the first day of the month, one full month (30 days) after your closing date. That means you could owe your first payment as soon as 31 days after closing or as late as 60 days after closing.
This payment schedule is used because mortgage payments are made in arrears, meaning you pay for the prior month rather than the current month. Some people opt for a bi-weekly payment schedule, which means they may need to make payments on the first and 15th of each month.
When you close on the house has a major impact on when you make your first payment, which is crucial to understand when preparing your budget at a time when you’ll likely feel a little cash poor.
Your first mortgage payment after closing should be the same as all your other mortgage payments, unless you have an adjustable-rate mortgage.
Mortgages follow an amortization schedule, which dictates how much of each payment goes toward the principal and how much goes toward interest. Your early payments tend to go toward the interest, with any extra going toward the loan's principal.
You can reach out to your loan officer if you have any questions or use a mortgage calculator to see how much your monthly payment will be.
Your mortgage payment includes four main parts: loan principal, loan interest, insurance, and taxes. Each payment contributes to paying back the loan, state and municipal property taxes, and private mortgage insurance (PMI), if applicable.
Mortgage payments may also include other fees, like processing fees or late payment fees if you don’t pay on time.
Closing costs, like prepaid interest, insurance, and taxes, aren’t part of your first mortgage payment; they’re paid before, on closing day.
The closing date on your loan dictates when your first mortgage payment is due. Your first payment must be within 60 days.
If you close on a month with 30 days, or less, then calculating the date of your first mortgage payment is fairly straightforward. It’s typically the first of the next month. For example, if you close on February 1 or February 3, your first mortgage payment will be March 1. If you close on February 14, then your first payment would be due May 1.
The specific date can be very important to note, especially if you’re closing around a month with 31 days. Because your first payment must always come within 60 days of closing, keep in mind the months that have 31 days: January, March, May, July, August, October, and December.
If you closed on March 1, your first payment is not due on May 1 — that would be too late because there are 61 days between March 1 and May 1. You would need to make your mortgage payment before.
There is a tradeoff between closing earlier and later in the month. Close early means you have a longer time to make your first payment, but pay more in prepaid interest as part of closing costs. Closing later means you pay less prepaid interest, but your first payment date will hit you sooner.
In the above example, you might be better off closing on March 10 instead to give yourself more time before owing payment on May 1. In this situation, you’ll prepay the interest for the entire period before your first payment, as part of your closing costs. While you’ll owe more upfront at the closing table, you’ll have longer to make your first official mortgage payment. Then, your next payment will come due the first of every month afterward.
That extra time to make your monthly payment can be very important, especially if your new home stretches your budget. You’ll still need liquidity for movers, furniture, and any planned and unplanned maintenance costs. If you’ve been renting, you might still owe some utility or rent costs on a lease.
While closing later in the month means you’ll be responsible for less prepaid interest, sometimes it can be helpful to close closing at the beginning of a month to give you more time to plan your budget and earn some more money to prepare for the impact of a mortgage payment. Plus, it can save renters from paying rent and a mortgage in the same month.
Once upon a time, making your first mortgage payment and subsequent payments involved paper and pens and trust in the Postal Service to deliver your check on time to your lender. Today, thanks to the internet, it’s easier than ever.
Depending on your mortgage lender, you may have access to an app or online portal to manage your loan. Virtually every lender in the US offers online payments in some capacity. As such, you can wait until the due date and make a payment online with a credit card or banking information. Many lenders also offer auto-pay options, so you never have to think about whether or not you remembered to pay the mortgage. Your first payment follows the same process as all of the others.
Missing your first mortgage payment isn’t a great look, but it’s usually not a big deal. Most mortgage lenders offer a grace period of about 15 days to make your payment before charging you a late fee. So, if a paycheck is delayed for some reason, you can make your payment a few days after the due date without incurring a fee or damaging your credit score.
After the grace period, however, you will incur a late fee and sometimes multiple on the same payment. Late fees tend to run anywhere between 3% to 6% of the loan amount, which doesn’t sound like much, but if your mortgage is $3,000, a 3% fee is $90. This isn’t chump change.
Falling behind on your mortgage payments raises the total lifetime cost of the mortgage and it can also hugely damage your credit score. A late mortgage payment stays in your credit file for seven years, which can make it difficult the next time you apply for a loan.
If you know you can’t make a mortgage payment for any reason, reach out to your lender as soon as possible to work towards a solution. They want you to pay the loan back, so they’ll help you figure out a way to not fall underwater with your debt. They may waive late fees, agree not to notify credit bureaus, or you might qualify for a loan modification, repayment plan, or a temporary payment reduction.
Nobody wants to pay for two homes when they’re only living in one. Knowing when your first mortgage payment is due can help you find the best time to close on your new home to avoid doubling up on payments.
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