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 could cost.
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)
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:
How Interest Rates Can Impact Your Mortgage Payments
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.
How Your Amortization Period Can Impact Your Mortgage Payments
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.
Keep in mind that 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:
| Interest Rate | Interest Paid Over 5 Years | Total Interest Paid Over 15-Year Amortization |
| 4.0% | $51,874.04 | $98,540.91 |
| 5.0% | $65,306.31 | $125,586.86 |
| 6.0% | $78,890.23 | $153,536.71 |
Example 2: 25-year amortization:
| Interest Rate | Interest Paid Over 5 Years | Total Interest Paid Over 25-Year Amortization |
| 4.0% | $55,845.39 | $173,418.18 |
| 5.0% | $70,211.42 | $223,444.49 |
| 6.0% | $84,675.31 | $275,825.96 |
Based on these two charts, 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. Further, the interest spent over both the loan term and amortization period is much higher with even 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.
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 components, so the mortgage amount would be slightly higher. This premium would need to be added to the overall mortgage amount.
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.
Find Out The Cost Of Other Mortgage Amounts
How Much Income Do You Need To Qualify For A $300,000 Mortgage?
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 $300,000 mortgage will rely heavily on your financial situation.
One of the biggest deciding factors is your income, which must be sufficient enough to cover any mortgage payments, interest and fees you’ll encounter during your amortization period.
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.
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 $35,000 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.
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.
