Canadian Mortgage Calculator

Enter the purchase price, down payment, amortization period and quoted rate to see the monthly payment. Property tax, home insurance, mortgage default insurance, condo fees and other yearly costs are optional and are shown alongside the mortgage payment so you can judge the full monthly cost of the home. The schedule below the results shows how each payment splits between interest and principal over the years.

Getting Your First Mortgage

Canadian mortgages differ from American ones in a few important ways. The amortization period, the time needed to pay off the loan completely, is usually 25 years, but the rate is locked in only for a shorter term, most often five years. At the end of each term you renew, either with the same lender or a new one, at whatever rates are then available. Over a typical amortization you will renew several times, so your payment can change at each renewal.

Under the federal Interest Act, a blended-payment mortgage must state its rate as compounded yearly or half-yearly, and semi-annual compounding is the standard for fixed-rate mortgages. This calculator converts the quoted rate into the equivalent monthly rate, which is why its payments are a little lower than a U.S. calculator would show for the same rate.

The minimum down payment depends on the price: 5% of the first $500,000 and 10% of the portion between $500,000 and $1.5 million. Homes priced at $1.5 million or more need at least 20% down. With less than 20% down, the mortgage must carry default insurance from CMHC or a private insurer, with a premium of roughly 2.8% to 4% of the loan that is usually added to the balance.

Insured mortgages are limited to a 25-year amortization, though first-time buyers and buyers of newly built homes can choose 30 years. Lenders also apply a stress test: you must qualify at the higher of 5.25% or your contract rate plus two percentage points, which ensures you could still afford the payment if rates rise.

Shop around before your first term starts. Banks, credit unions and monoline lenders all compete, and a mortgage broker can compare many of them. Look beyond the rate at prepayment privileges, penalties for breaking the mortgage early and whether the mortgage is portable to a new home.

Budget for closing costs as well. These include land transfer tax in most provinces (first-time buyers may qualify for rebates), legal fees, a home inspection, title insurance and adjustments for property taxes the seller has prepaid. Setting aside 1.5% to 4% of the price is a common guideline.

r = (1 + i ÷ 2)^(1/6) − 1 M = P × r ÷ [1 − (1 + r)⁻ⁿ]

i

quoted annual rate, as a decimal

r

equivalent monthly rate under semi-annual compounding

P

mortgage amount (price minus down payment)

n

number of monthly payments (amortization years × 12)

Because interest compounds twice a year rather than monthly, a Canadian payment is slightly lower than a U.S. payment at the same quoted rate: $3,722.27 versus $3,741.38 on $640,000 at 5% over 25 years.

Homeowners' Association (HOA) Fees

In Canada these are usually called condo fees or strata fees. Condominium owners pay them monthly to cover building insurance, maintenance of common areas, some utilities and contributions to the reserve fund. Lenders count part of them when assessing affordability, so enter them under Condo/HOA fee.

Frequently asked questions

Sources

• Financial Consumer Agency of Canada – Mortgages
• Canada Mortgage and Housing Corporation
• Office of the Superintendent of Financial Institutions