Mortgage Basics

How Much Will an $800,000 Mortgage Cost You

How Much Will an $800,000 Mortgage Cost You

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    Mortgages are long-term financial commitments that can last for many years. With rising home prices and interest rates, many Canadians have been concerned about how affordable taking out and maintaining a mortgage is. 

    If you are looking to borrow $800,000, it is important to understand how much your monthly mortgage payments will be and how much interest you will pay over the life of your loan. 

    This post will answer your questions about monthly mortgage payments and total interest paid on an $800,000 mortgage based on various interest rate scenarios and typical amortization periods.

    Key Takeaways

    • Monthly payments on an $800,000 mortgage will vary based on interest rates and the amortization chosen.
    • The interest rates and amortization can influence the total interest paid over the life of an $800,000 mortgage.
    • The longer the amortization period, the more you will pay in interest over the life of the loan.

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    Monthly Payments for an $800k Mortgage

    Monthly payments on an $800,000 mortgage will depend on several factors, including your interest rate and the amortization. 

    A mortgage calculator like nesto’s can help you estimate payments based on these variables. Typically, your mortgage payment will comprise the principal amount and interest. 

    If you put down less than 20% as a down payment, your mortgage will include mortgage default insurance unless paid with cash, which is not added to your mortgage. 

    By paying for your mortgage insurance with cash, you can take advantage of the lower insured mortgage rates without amortizing it over the duration of your mortgage. Additionally, you have the option with most lenders to include property taxes as part of your mortgage payment, which will be collected and remitted on your behalf. 

    • For example, using nesto’s current 5-year fixed rate of 5.39%, your monthly payment on an $800K mortgage with a 25-year amortization would total around $4,832, while a 30-year amortization would be approximately $4,458. This lower amount is due to the principal being spread out over an extra 5 years, but keep in mind that you will pay more in interest-carrying costs the longer your amortization.

    Note: Your payment may differ depending on your mortgage term, amortization, and payment frequency selected when you obtain your mortgage. 

    Here’s what monthly payments may look like for you based on a few different interest rate scenarios (rounded to the nearest dollar):

    Interest Rate Monthly Payment (25-Year Amortization) Monthly Payment (30-Year Amortization)
    5.00% $4,653 $4,270
    5.25% $4,767 $4,390
    5.50% $4,883 $4,511
    5.75% $5,000 $4,636
    6.00% $5,188 $4,759
    6.25% $5,238 $4,884
    6.50% $5,359 $5,011
    6.75% $5,480 $5,139
    7.00% $5,603 $5,269
    7.25% $5,727 $5,399
    7.50% $5,852 $5,531
    7.75% $5,979 $5,664
    8.00% $6,106 $5,798

    Where to Find the Best Rates on an $800k Mortgage

    Securing the best interest rate on your mortgage can significantly affect your total monthly costs. A great place to start is to compare offerings from different banks and lenders. This can be done by visiting the various bank and lender websites, using online comparison tools like nesto’s comparison page, or consulting a mortgage expert directly.  

    Prime lenders (some of whom are A lenders) will often have the best rates to offer. However, you must meet the strict qualifying criteria of these lenders to obtain the best rates. Subprime lenders (B and private lenders) will often have higher rates when compared to prime lending. These lenders are typically better suited for those with more equity in the subject property, self-employed income, or needing help to meet the qualifying criteria of prime lending. 

    Private (also known as syndicate) lenders loan out money directly to the borrower as investors and set their own terms, conditions, and rates for the mortgage. Interest rates tend to be higher than prime and subprime lenders, but offer mortgages to those who require a non-income qualifying (NIQ) solution. 

    Remember that the lowest rates don’t always mean the best deal. Consider other features and benefits like prepayment options, porting privileges, and any restrictions that could see you incur a hefty penalty if you prepay or pay off your mortgage before the term ends. 

    Total Interest Paid on an $800k Mortgage

    The total interest you’ll pay on an $800,000 mortgage over its lifetime can be considerable. 

    Using nesto’s current 5-year fixed rate of 5.39% and a 25-year amortization, you would pay approximately $202,246 in interest over a 5-year term. If you look at the full 25 years, assuming your interest rate never changes, that figure balloons to $649,609.

    However, if you opt for a 30-year amortization to lower your monthly payments, you would pay approximately $205,460 in interest over the 5-year term and $804,728 over the entire 30 years, assuming your interest rate never changes. 

    How to Apply for an $800k Mortgage

    The application process for an $800,000 mortgage with nesto typically involves the following steps:

    1. Prepare Documents: Gather all the necessary documents, including proof of income, bank statements, and identification.
    2. Find a mortgage lender or visit 
    3. Complete the application: don’t include an address for the property unless you have already located one – a prequalification can be obtained when the subject property is not confirmed. Include details from the MLS listing if you have found a property where your offer is accepted. A nesto sales development representative (SDR) may reach out to you at this point to help you with your application.
    4. Book a meeting:  an expert at nesto will speak to you to understand your financial situation and match it to the most suitable mortgage solution for your needs. After meeting with an expert, a nesto processor will be assigned to help you fully complete or update any documentation needed to take your application to the finish line.
    5. Get approved – you’ll get firm or conditional approval of financing from nesto.
    6. Provide additional documentation – include anything missing, including your realtor and solicitor’s contact information. Your nesto processor will contact you to help you complete your mortgage application.
    7. Receive instructions – instructions are sent to your solicitor or notary.
    8. Pay outstanding costs – Your notary or solicitor will confirm any outstanding closing costs, including your downpayment, land transfer taxes, title insurance/search/survey/land transfer office fees, and legal fees.
    9. Sign on your mortgage – you’ll book an appointment to sign with your solicitor.
    10. Get keys to your new home – you’ll receive the keys to your new home on your closing date.

    Frequently Asked Questions

    What is the monthly mortgage payment on an $800,000 mortgage?

    Monthly payments on an $800,000 mortgage will depend on the interest rate offered and loan amortization. If you don’t put down more than 20% of the purchase price, you must pay mortgage default insurance unless you decide to pay the premium upfront in cash. You may also include your property taxes in your monthly mortgage payment. The lender will collect your property taxes and remit them to you. 

    If you only use principal and interest to calculate mortgage payments on an $800K loan with a 5% interest rate and a 25-year amortization, you can expect to pay around $4,653 monthly.

    What income do you need for an $800,000 mortgage in Canada?

    The income required will depend on many factors, including the amount of debt you already owe, the amount of money you have saved up for a down payment, and current interest rates. The easiest way to determine how much income you’ll need is to look at your debt-to-income ratio. Generally, you’ll be able to borrow 3 to 4 times your income with a down payment of 20%.

    Income Needed = (monthly payment + taxes/12 + $100 for heating + condo fees/2)*12/0.39*

    Your monthly payment is based on a rate of +2% over 25 yrs or 30 yrs.

    The 0.39* factor is changed to 0.35 whenever you use 30 years for amortization or have a 20% downpayment to contribute to your home purchase.

    How can I find the best rate for an $800,000 mortgage?

    To find the best rate for a $800,000 mortgage, compare offerings from different banks and lenders. You can do this by using comparison tools or consulting a mortgage expert. nesto makes it easy to compare mortgage rates in your province or territory.

    Are there any hidden costs with an $800,000 mortgage?

    An $800K mortgage doesn’t come with any hidden costs. However, you may have to consider more than the principal and interest you will pay on the mortgage. You may also have to pay monthly and recurring expenses such as property taxes and home insurance. You may also need mortgage default insurance if putting down less than 20% as a downpayment. Some other one-time fees include home appraisal and inspection fees, land transfer taxes, moving expenses and closing costs. Closing costs can range from 1.5% to 4% of your purchase price, depending on where you live.

    Final Thoughts

    Understanding the full impact of an $800,000 mortgage, not only what you expect as monthly costs but also how much interest you will pay over the life of the loan, can help you realize the full implications and costs of taking on a mortgage.  

    Contact nesto’s mortgage experts today for the best rates on your mortgage.

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