How Much Does A $250,000 Mortgage Cost In Canada
If you're thinking of financing a home worth $250,000, read this to find out how much it'll cost you.
Mortgage prices fluctuate greatly from region to region and home to home. That said, the average house or condo costs hundreds of thousands of dollars these days, which is why it can be extremely difficult to qualify for a mortgage. If you’re thinking of purchasing a house, it’s important to consider how much mortgage you can qualify for and how the payments will fit into your budget.
If you’re thinking of financing a home worth $250,000, read this to find out what your mortgage payments will be like and how much it’ll cost you.
Similar to the possible income requirements, the size of your mortgage payments depends on your lender’s conditions and overall financial health. Additionally, you’ll have to factor in your interest rate, down payment and amortization period.
Here’s an example of how much your mortgage payments would be on a $250,000 house in Canada, let’s do a basic calculation of your potential loan payments:
Example:
Here’s what your loan payments would look like for a $250,000 mortgage once we factor in different amortization periods and payment frequency:
Payment Frequency | 15-Year Amortization | 25-Year Amortization |
Bi-Weekly Payment | $738 | $506 |
Monthly Payment | $1,600 | $1,098 |
Using the same example as above, let’s determine how much interest you could be charged on a $250,000 house if it had a common 5-year closed term and monthly payments. In this case, the amount you’ll pay is based mainly on your interest rate and term length.
Interest Rate | 15-Year Amortization Period | Monthly Payment | Interest Paid Over 5 Years | Total Principal Paid | Total Balance Remaining |
1.5% | 5-year closed term | $1,439 | $14,744 | $71,624 | $160,351 |
2.5% | 5-year closed term | $1,545 | $24,780 | $67,942 | $164,033 |
3.0% | 5-year closed term | $1,600 | $29,855 | $66,139 | $165,836 |
Interest Rate | 25-Year Amortization Period | Monthly Payment | Interest Paid | Total Principal Paid | Total Balance Remaining |
1.5% | 5-year closed term | $927 | $15,902 | $39,733 | $192,242 |
2.5% | 5-year closed term | $1,039 | $26,714 | $35,636 | $196,339 |
3.0% | 5-year closed term | $1,098 | $32,173 | $33,695 | $198,280 |
When buying a home, most real estate experts will tell you to put down at least 20% of a home’s total sales price. Usually, this is because it means you won’t have to buy CMHC mortgage loan insurance, also known as mortgage default insurance. Plus, by offering more money upfront, you might have better approval odds, a shorter amortization period and less interest to pay.
Depending on the price of your home, where you apply and how strong your finances are some lenders will allow you to pay as little as %5, if any other amount is too pricey.
Just remember that any down payment below 20% will require you to buy mortgage default insurance.
For a home priced at $250,000 you’d need between $12,500 (5%) to $50,000 (20%) for a down payment.
Price of the Home | Minimum Down Payment Required |
$500,000 or less | 5% |
More than $500,000 | 5% down on the first $500,000, 10% on the remainder |
As mentioned, CMHC mortgage loan insurance is mandatory for any down payment that’s less than 20%. Mortgage default insurance protects your lender if you default on your payments. Luckily, it can also help you qualify for a mortgage with a minimum down payment starting at 5%.
Your mortgage default insurance premium is calculated using your loan-to-value ratio (mortgage loan amount ÷ purchase price). You can then pay your full premium upfront or ask your lender to add it to your mortgage payments.
Here is how much your premiums will cost you based on different LTVs:
LTV | Premium on Mortgage Amount | Mortgage Default Insurance Amount |
Up to and including 85% (15% down payment) | 2.80% | $5,950 |
Up to and including 90% (10% down payment) | 3.10% | $6,975 |
Up to and including 95%(5% down payment) | 4.00% | $9,500 |
Although $250,000 is a relatively “cheap” home in this day and age, it’s still a hefty sum of money that not everyone can comfortably afford with their other expenses. So, if you apply for a mortgage that’s large enough to cover it, lenders will have to examine your finances thoroughly. In particular, your income is going to be under the microscope.
The personal income that you’ll need in order to qualify for a $250,000 mortgage can vary according to your current financial situation and lender’s requirements. Mostly, they’ll want to confirm that you’re steadily employed and earning enough to cover any mortgage payments, interest and fees that may come up over the life of your loan.
$300,000 | Learn More |
$700,000 | Learn More |
$1,000,000 | Learn More |
Yes! The First-Time Homebuyer incentive is a “shared equity” mortgage (with the Government of Canada) that helps you lower your loan payments. The federal program allows you to have easier access to buying your first home. This program allows you to borrow 5% or 10% of the home’s price from them, in exchange for a share of the property’s value.
This amount would be added to your down payment, thereby reducing your mortgage amount, which would help lower your payments and overall costs. Repayment would then occur within a 25-year period or when you sell the home. Keep in mind that your total borrowed amount can be no more than 4 times your qualifying income (or 4.5 times for homes located in Toronto, Vancouver and Victoria).
First-time homebuyers in Toronto, Vancouver or Victoria Census Metropolitan areas can qualify for slightly higher amounts. Individuals looking for homes in these areas can qualify with an income of $150,000, instead of $120,000 like the rest of the country. As such, any Canadian home that’s worth $480,000 or under (675,000 or under in the cities above) is eligible for this incentive.
Thankfully, there are many ways you can accomplish that goal, whether it’s for the purposes of financing your first home or second. To learn more about what it takes to be eligible for a mortgage, talk to your real estate agent or financial advisor. For more information about the mortgage process, check out Loans Canada!
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If you're thinking of financing a home worth $250,000, read this to find out how much it'll cost you.
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