How much does a $300,000 mortgage cost?

When you’re shopping for a home, you’ll want to understand the costs involved in paying for it, especially since the median home price last year was $412,000. A $300,000 mortgage is more affordable but still comes with many costs aside from the amount you borrow — not only upfront costs, but also long-term, ongoing costs. Here’s what you need to know about taking out a $300,000 mortgage.

Monthly payments for a $300,000 mortgage

Your monthly payment depends on several factors, including the mortgage rate. For example, if you borrow $300,000 in a 30-year fixed-rate mortgage at 6.5% interest, your monthly payment would be $1,896.20 (not including escrow costs). At 8% interest, the payment would be $2,201.29. 

The term length affects the payment, too. At the same 6.5% interest, but with 15 years of payments instead of 30, your monthly payment would be $2,613.32 — but you would pay off the loan in half the time.

A monthly mortgage payment has several components:

• Principal: This is the amount borrowed. Every month, a portion of the payment goes toward paying down the principal.
• Interest: The cost of borrowing is the interest rate. You’ll pay interest on the principal every month.
• Taxes: Some mortgage lenders will establish an escrow account for you and collect a portion of your property taxes, which they place into this account. Your mortgage lender can also send the property tax payments directly to the tax collector on your behalf.
• Insurance: If your loan requires mortgage insurance, you can pay that via your monthly mortgage payment as well. Some lenders will also collect and pay your homeowners insurance on your behalf.

See the chart below for what a monthly mortgage payment could look like if you change the annual percentage rate (APR) or choose a 15-year or 30-year mortgage. The amounts below are figured for principal and interest for a fixed-rate mortgage, which means the APR doesn’t change over the life of the loan. These amounts also don’t take into account insurance or taxes.

Where to get a $300,000 mortgage

Before you start shopping for a home, shop for the mortgage. 

Online mortgage companies, local banks, and big-name lenders all can help you get a $300,000 mortgage. The real challenge will be choosing the right home loan among your different options.

Compare loans from a variety of lenders, because each one will offer different rates and terms. You’ll want to compare the mortgage interest rate, closing costs, fees, and discount points. Make sure the loans you compare have the same interest rate type (adjustable or fixed) and term length (usually 15 or 30 years). Compare the same type of loan, too, whether it’s conventional, VA, USDA, or FHA. 

Once you’ve found a lender and loan you like, you can proceed with the application. The lender will review your file and make sure you qualify for the mortgage you’ve selected.

What to consider before applying for a $300,000 mortgage

Getting a $300,000 mortgage means you’ll need to be able to afford the monthly payments plus the ongoing expenses of owning a home.

One way to determine whether you can afford a home is to consider your debt-to-income ratio (DTI), which compares your monthly gross income to your monthly debts. DTI requirements might vary from lender to lender, but you’ll typically want your ratio to be below 45%. You can calculate your DTI by dividing your regular monthly debt payments by your income.

You can also look at how much of your monthly income would go toward housing. You can estimate this expense by dividing your potential monthly mortgage payment by your gross monthly income. Figuring out how much your existing debt payments are — and how much a mortgage would contribute to them — will help you plan for homeownership. 

“It's not just about whether you can get a loan, but about securing a loan that aligns with your financial and homeownership goals,” said Chris Birk, VP of Mortgage Insight at Veterans United Home Loans.

A mortgage will have costs over and above the amount you borrow. You’ll need to plan for all of these costs to be sure you can truly afford a $300,000 mortgage.

First, there’s interest. On a $300,000 mortgage, a 6.5% interest rate over 30 years will cost you an estimated $382,633.47 in interest. Added to your $300,000 loan, that is a total outlay of $682,633.47, divided over 12 payments a year for 30 years. 

Then there are upfront costs, which you’ll pay when you first take out the mortgage. These include closing costs (typically around 2% to 5% of the home price) and your down payment. Some common closing costs include:

Appraisal fees: Lenders require an evaluation of your home to determine the value of the property.

Attorney fees: Depending on the state you’re buying in, you might be required to hire a real estate attorney to complete the purchase.

Title insurance: There are two types of title insurance — lender’s title insurance (often mandatory) and owner’s title insurance (optional). The former is designed to protect the lender against any claims made on the home and the latter protects the homebuyer.

Discount points: You have the option to pay a percentage of the loan amount (one point equals 1%) in exchange for a lower interest rate.

Survey fees: Your lender might require a survey of your property to determine the lot boundaries.

Your down payment will likely be between 3% and 20% of the loan amount ($9,000 to $60,000 on a $300,000 mortgage). Closing costs are typically about 2% to 5% of the purchase price.

There are also long-term costs you’ll need to plan for. Ongoing, long-term costs include homeowners insurance (which can change from year to year), private mortgage insurance, if applicable, homeowners association (HOA) fees, property maintenance, and upkeep of the home.

Amortization tables on a $300,000 mortgage

Even though your monthly payment stays the same every month with a fixed-rate mortgage, the makeup of those payments changes over time. An amortization schedule shows you what proportion of your payments each year go to principal and what goes to interest. The table below shows the monthly payment, total interest, and total principal paid each year on a 30-year, fixed-rate mortgage for $300,000 with a 6.0% APR.

If your mortgage is 15 years instead of 30, those figures will change. The monthly payment will increase to $2,531.57, but the total interest paid will decrease. 

How to get a $300,000 mortgage

When you’re ready to get a mortgage, you’ll typically follow these steps:

• Check your credit: Before you get started, check your credit report. Look for any errors that can drag down your credit score; the better your credit score, the better rates you’ll qualify for. 
• Set a budget: Look at your monthly expenses and current housing payments. What can you comfortably afford each month, leaving enough room for your other debt repayments, plus saving, investing, and maintaining your new home? How much do you have saved for a down payment and closing costs? Use a mortgage calculator to see how different loan amounts, down payments, and interest rates affect your monthly mortgage payment.
• Get pre-approved: Getting a mortgage pre-approval will give you an idea of how much a lender is tentatively willing to lend to you. You can also use a mortgage pre-approval to show sellers that you’re ready and able to make an offer. You can get pre-approved by more than one lender, so shop around.
• Compare loans: Compare offers from several different mortgage lenders by looking at the APR, fees, and closing costs for each loan. 
• Shop for your home: With your pre-approval letter secured, you can begin shopping for homes. A qualified real estate agent will help you compare homes to find one in your budget with the features you’re looking for. Once you’ve found a home you want, work with the agent to make an offer to the seller.
• Complete your mortgage application: After your offer has been accepted, notify your chosen lender of your intent to proceed with the mortgage and complete the full mortgage application. You’ll need to provide documentation to prove your identity, income, and assets.
• Go through underwriting: During the underwriting process, your lender will verify all the information you have provided to make sure you can repay the mortgage. The underwriter will usually require you to submit pay stubs, tax returns, bank statements, and other financial documents. 
• Close on the loan: The final step is closing. Three days before closing, your lender will send you a closing disclosure document that contains all the final details about your loan, including fees and closing costs. On closing day, you’ll pay your down payment and closing costs, sign the papers, and receive your keys.