How to use the Canadian mortgage calculator
Enter the home price, your down payment as a percent of the price, the amortization period and the interest rate. The calculator shows the monthly mortgage payment, the total interest and the payoff date. Turn on taxes and costs to see the full monthly cost of owning the home, and add monthly, yearly or one-time prepayments to see how much sooner you could be mortgage-free and how much interest you save.
How Canadian mortgage payments are calculated
Canadian mortgages work like most others, with one difference: fixed mortgage rates are quoted with interest compounded semi-annually, not monthly, as the Interest Act requires the rate to be stated. The calculator converts the quoted rate to the monthly rate that gives the same growth over six months: r = (1 + rate ÷ 2)1 ÷ 6 − 1. The payment is then M = P × r ÷ (1 − (1 + r)−n), where P is the mortgage and n the number of monthly payments.
Canadian mortgage example
An $800,000 home with 20% down leaves a $640,000 mortgage. At 5% with a 25-year amortization the payment is $3,722.27 a month, and you pay $476,681.57 in interest over 25 years. With property tax of 0.3%, home insurance of $2,500 and $6,000 of other yearly costs, the total monthly cost is $4,630.61.
Semi-annual compounding makes 5% an effective yearly rate of 5.06%. A calculator that compounds monthly would show $3,741.38 for the same loan, $19.10 a month more.
Monthly payment by rate and amortization
| Rate | 20 years | 25 years | 30 years |
|---|---|---|---|
| 4% | $3,867.18 | $3,366.53 | $3,043.32 |
| 5% | $4,205.60 | $3,722.27 | $3,415.62 |
| 6% | $4,558.01 | $4,094.76 | $3,806.87 |
For a $640,000 mortgage, compounded semi-annually.
Minimum down payment and mortgage insurance
With less than 20% down you need mortgage default insurance from CMHC or a private insurer, and the home must cost less than $1,500,000. The minimum down payment is 5% of the first $500,000 and 10% of the part above it; at $1,500,000 or more it is 20%. The insurance premium is a one-time charge, usually added to the mortgage: 4.00% of the loan with 5% to 9.99% down, 3.10% of the loan with 10% to 14.99% down, 2.80% of the loan with 15% to 19.99% down, plus 0.20% with a 30-year amortization.
| Home price | Minimum down payment | Mortgage | Insurance premium |
|---|---|---|---|
| $400,000 | $20,000 (5%) | $380,000 | $15,200 (4.00%) |
| $600,000 | $35,000 (5.83%) | $565,000 | $22,600 (4.00%) |
| $800,000 | $55,000 (6.88%) | $745,000 | $29,800 (4.00%) |
| $1,000,000 | $75,000 (7.5%) | $925,000 | $37,000 (4.00%) |
| $1,200,000 | $95,000 (7.92%) | $1,105,000 | $44,200 (4.00%) |
| $1,500,000 | $300,000 (20%) | $1,200,000 | Not insurable |
Premiums for a 25-year amortization and a down payment from your own savings. A gifted or borrowed down payment can carry a higher premium.
Key terms
- Amortization period is the time to pay off the whole loan, usually 25 years.
- Term is how long your rate and conditions are fixed, often 5 years. At the end you renew, usually at a new rate.
- Mortgage default insurance is required with less than 20% down. It is a one-time premium added to the loan; here you can enter a yearly cost instead to see it in the monthly budget.
- Prepayment privileges let you pay extra each year, often 10% to 20% of the original loan, without a penalty.
Canadian mortgage payment in Excel
Excel works with the monthly rate: =PMT((1+5%/2)^(1/6)-1,300,-640000) returns $3,722.27. Using 5%/12 instead would give the higher monthly-compounded payment of $3,741.38.
Related calculators
For a mortgage with monthly compounding, such as in the United States, use the mortgage calculator. The mortgage payoff calculator compares ways to pay a mortgage off early, the refinance calculator shows whether a new rate at renewal pays off, and the rent vs. buy calculator compares owning with renting.