If you’re considering a home purchase, you’ll want to determine how much you can expect to pay every month for your mortgage. Depending on the price of the home, your down payment amount, and the interest rate you’re charged (among other things), the cost of your mortgage can vary greatly.
To give you an idea of how much you can expect to pay, let’s look at a $300,000 mortgage and how much it can cost you over the life of the loan.
Key Points
- The cost of a $300,000 mortgage depends on several factors, including the interest rate, loan term, and amortization period.
- Home buyers should calculate potential mortgage payments using various rates, term lengths, and amortizations to see how much a $300,000 might cost.
- To keep your monthly costs lower, consider extending your amortization, boosting your credit score to secure a lower rate, and making lump-sum payments towards the principal every year.
What Would My Mortgage Payments Be For A $300,000 Mortgage?
Your mortgage payments for a $300,000 mortgage depend on the mortgage terms you qualify for, plus other factors, including your:
- Interest rate
- Loan term
- Amortization period
- Payment frequency (ie. bi-weekly, monthly, etc)
How Interest Rates Can Impact Your Mortgage Payments
To help you get a sense of how much your mortgage payments would be on a $300,000 mortgage, let’s illustrate using different interest rates and amortization periods. In the following examples, we’ll use a 5-year fixed-rate loan term:
Example 1:
4.25% interest vs. 6.75% interest (assuming a 25-year amortization period):
| Interest Rate | Monthly Mortgage Payment |
| 4.25% | $1,618.98 |
| 6.75% | $2,055.15 |
As you can see, even a slight difference in the mortgage rate can make a significant difference in your monthly mortgage payment amounts. In the above example, you’d be paying an extra $436.17 per month with a rate of 6.75% compared to a 4.25% rate.
Example 2:
15- vs. 25-year amortization period (assuming an interest rate of 5.25%):
| Amortization Period | Monthly Mortgage Payment |
| 15 years | $2,402.73 |
| 25 years | $1,787.75 |
This scenario shows that extending your amortization will shrink your mortgage payments. In this case, choosing a 25-year amortization over a 15-year amortization would reduce your monthly mortgage payments by $614.98.
| Note: A longer-term amortization means you’ll pay more in interest over the life of the loan, which we’ll discuss below. |
How Much Interest Would You Pay On A $300,000 Mortgage?
When it comes to mortgages, interest is one of the most important costs to consider, as it can drastically change the size of your loan payments and total debt. The amount of interest you’ll have to pay overall depends on your interest rate and amortization term.
Here are some examples using the same factors above (5-year fixed rate term, closed mortgage, and a monthly repayment schedule to illustrate how much interest you could pay on a $300,000 mortgage:
Example 1:
15-year amortization vs. 25-year amortization
| Interest Rate | Total Interest Paid Over 15-Year Amortization | Total Interest Paid Over 25-Year Amortization |
| 4.0% | $98,540.91 | $173,418.18 |
| 5.0% | $125,586.86 | $223,444.49 |
| 6.0% | $153,536.71 | $275,825.96 |
Here, you’ll notice that the amount of interest you pay over the entire life of the loan is almost twice as much on a 25-year amortization compared to a 15-year amortization, even with a slight increase in the rate.
So, both the interest rate and the amortization period play a key role in the amount you’ll pay in interest on a $300,000 mortgage.
| Pro Tip: Use an online loan calculator to help you get an idea of what your mortgage may cost you per month, and overall. |
How Much House Can You Afford With A $300,000 Mortgage?
Wondering how much house you can afford if you qualify for a $300,000 mortgage? Well, the amount depends on your down payment.
Here are a few examples to illustrate:
| House Price | Down Payment Amount (%) | Down Payment Amount ($) | CMHC Insurance | Mortgage Amount |
| $303,644 | 5% | $15,182 | $11,538 | $300,000 |
| $323,311 | 10% | $32,331 | $9,020 | $300,000 |
| $343,328 | 15% | $51,499 | $8,171 | $300,000 |
| $375,000 | 20% | $75,000 | $0 | $300,000 |
Any down payments less than 20% will have a CMHC premium component, so the mortgage amount would be slightly higher. This premium would need to be added to the overall mortgage amount.
How Much Income Do You Need To Qualify For A $300,000 House?
These days, the average price of a house can vary greatly depending on where the property is located and what condition the home is in. A similar principle applies to the financial institutions that provide mortgages. Every lender has different requirements, and your chances of qualifying for a mortgage for a $300,000 house will rely heavily on your financial situation.
One of the biggest deciding factors is your income, which must be sufficient to cover any mortgage payments, interest, and fees you’ll encounter during your amortization period.
Example:
Assuming a 5-year fixed-term, 25-year amortization, and 4.54% interest rate, here’s how income you need based on the down payment you make.
| 5% Down Payment ($15,000) | 20% Down Payment ($60,000) | |
| Income Required | ~$90,000 | ~$70,165 |
| Max mortgage | ~$296,400 | ~$239,364 |
| Maximum House Price | ~$300,000 | ~$299,364 |
*Numbers are estimated using CIBC mortgage affordability calculator.
Note: This example also assumes you have no other debts.
How Much Mortgage Loan Insurance Would You Need To Pay If You Offer The Minimum Down Payment?
Mortgage loan (or default) insurance protects the lender if you start missing payments and can’t make them up within a reasonable timeframe. As mentioned, lenders require you to buy CMHC insurance if you have less than a 20% down payment.
Your premium will usually be 0.6% to 4.5% of your total borrowed amount, based on your loan-to-value (LTV) ratio (mortgage amount divided by purchase price). It can be paid upfront in a lump sum or divided amongst your mortgage payments. Essentially, if you offer a lower down payment, you’ll have to pay a higher mortgage insurance premium.
The following table displays the different CMHC rates based on down payment size and a mortgage amount of $300,000 :
| Down Payment Size | Premium Charged | Mortgage Default Insurance Cost |
| 5% | 4.0% | $12,000 |
| 10% | 3.1% | $9,300 |
| 15% | 2.8% | $7,500 |
Based on the previous example above, the minimum down payment (5% of the purchase price) to get a $300,000 mortgage would be $15,789, which means you can afford a $315,789 house. If you choose to make the minimum down payment on a home priced at $315,789, you would be charged a mortgage default insurance premium rate of 4.0% on the $300,000 mortgage.
In this case, your mortgage default insurance premium would come to $12,000 ($300,000 x 4.0%). As such, your total mortgage would come to $312,000.
Learn more: Mortgage Default Insurance (CMHC Insurance)
Mortgage Stress Test Required
Lenders will look at numerous factors to determine how much income you need to qualify for a $300,000 mortgage, including the Canadian mortgage stress test, your monthly housing expenses, and your down payment, among other factors.
Debt Service Ratio Limits
Even more important than looking solely at your income are your debt service ratios, including your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. These ratios represent how much of your monthly income is dedicated to covering your current monthly debt.
Lenders have specific thresholds that borrowers cannot exceed. More specifically, your GDS and TDS ratios should be no more than 39% and 44%, respectively. If these ratios are higher than the lender’s limits, you could be denied a mortgage.
So, the income you need to qualify for a $300,000 mortgage depends not just on your income itself, but also on how much debt you currently have.
How Does A $300,000 Mortgage Compare To A $700,000 Mortgage?
The loan amount you take out directly affects all costs expected of you. Here’s how a $300,000 and $700,000 mortgage compare with each other, assuming a 25-year amortization and a 5% interest rate:
| Loan Amount | Monthly Payment | Total Interest |
| $300,000 Mortgage | $1,744.81 | $223,444.49 |
| $700,000 Mortgage | $4,071.23 | $521,370.47 |
Find Out The Cost Of Other Mortgage Amounts
Programs Available To Help You Pay A $300,000 Mortgage
The Canadian government offers a handful of programs to help home buyers afford a $300,000 mortgage:
First-Time Home Buyers’ Amount
If you’re buying your first home, you may be eligible for the First-Time Home Buyers’ Amount. When you file your income taxes for the year that you purchased your first house, you can claim this non-refundable tax credit and get up to $1,500.
Home Buyers’ Plan (HBP)
To help you come up with a down payment on a home, you can borrow from your Registered Retirement Savings Plan (RRSP) through the Home Buyers’ Plan. This program allows you to withdraw up to $60,000 tax-free to be used for the purchase of your first home. The funds must be repaid within 15 years.
First Home Savings Account (FHSA)
The First Home Savings Account helps Canadians under 40 save for a down payment. This tax-free and tax-deductible account lets you save up to $40,000 to buy your first home.
GST/HST New Housing Rebate
GST or HST is applied to the purchase of newly constructed homes. However, you may be able to get a portion of this tax back thanks to the GST/HST New Housing Rebate. The maximum rebate amount depends on the province you reside in.
Learn more: Best Homeowner Tax Credits In Canada
Strategies To Reduce The Cost Of A $300,000 Mortgage
There are some ways to bring your monthly mortgage payments down on your $300,000 mortgage:
- Choose A Longer Amortization: If you’re looking to reduce your monthly payments, consider extending your amortization period. Just keep in mind that this will increase the total interest owed. If you’re looking to save on interest, on the other hand, a shorter amortization period can save you, but your monthly payments will be higher.
- Shop Around For Rates: Compare offers from banks, credit unions, and alternative lenders. Even a 0.25% rate difference can mean big savings. You can quickly compare loan offers by using Loans Canada’s CompareHub tool.
- Make Extra Payments: If your lender allows it, you can make lump sum payments towards your principal each year, which reduces your principal faster and cuts down interest costs.
Other Costs To Consider Beyond The Mortgage
To understand your true monthly housing costs, it’s important to consider other expenses in addition to your mortgage:
- Upfront Costs: Prepare to cover closing costs when you finalize your mortgage, such as legal fees, land transfer taxes, title insurance, and appraisal fees. These can add up to 1.5% to 4% of the home’s value.
- Property Taxes: These annual taxes vary by municipality and assessed value of the property.
- Home Insurance: An insurance policy is required by lenders, and costs depend on location and coverage.
- Utilities: Heating, electricity, and water bills will come in each month, which you must budget for.
- Maintenance & Repairs: Eventually, you’ll need to make repairs and tackle regular tasks to properly maintain your home, which can cost quite a bit each year.
- Condo Fees: If you’re buying a condo, you’ll need to cover monthly fees for building maintenance and amenities.
Bottom Line
Considering how much a house can go for today, $300,000 is a relatively small mortgage. So, it’s possible to qualify for one under the right circumstances. In the end, to qualify for a $300,000 mortgage, the most important factors include a strong annual income, good credit, a reasonable down payment, and low debt.
