Canada Mortgage Calculator

Canadian fixed mortgage rates are not quoted the way American ones are. Section 6 of the federal Interest Act requires a mortgage with blended payments to state its rate calculated yearly or half-yearly, not in advance, and Canadian lenders quote half-yearly: a fixed rate advertised as 6% means 3% per half-year, compounded twice a year. To turn that quote into a monthly payment, the calculator first converts it to the equivalent monthly rate: i = (1 + quoted/2)^(1/6) − 1.

A US calculator skips the conversion and divides the annual rate by 12. The difference is small but real. At a quoted 6%, the Canadian monthly rate is 0.493862%; the US-style rate is 0.5%. On a $100,000 loan amortized over 25 years, that is $639.81 a month against $644.30 — $4.49 a month, about $1,348 over the amortization. A generic calculator overstates a Canadian fixed-rate payment at the same quoted rate, every time.

The gap widens as rates rise, because the compounding difference itself compounds. This widget applies the Canadian conversion, so the payment it returns is the one the semi-annual convention implies for a Canadian fixed rate. Variable-rate mortgages are the one exception to the convention — they commonly compound monthly — and they are covered under edge cases below.

Take the calculator's defaults: a $500,000 home with $100,000 down leaves a $400,000 loan. At a hypothetical quoted rate of 4.5% over a 25-year amortization, the equivalent monthly rate is 0.371532% and the payment is $2,213.89.

The 25 years is the amortization — the schedule the payment is sized against. The rate itself holds only for the term, here 5 years. Canadian mortgages separate the two: the term is the length of the current agreement with your lender, and the loan must be renewed, at whatever rates then prevail, until the amortization is paid down. The most common amortization is 25 years, and the dominant product is the 5-year fixed, which makes up about 40% of all outstanding Canadian mortgages.

Here is what the first term actually accomplishes on the default numbers.

Only 12.2% of the loan is repaid, and about 63 cents of every dollar paid went to interest. That is normal early-amortization arithmetic, not a bad deal — but it is why the Balance at renewal card matters more than the Total interest one. The widget's total-interest figure ($264,168 here) assumes the quoted rate holds for all 25 years; useful for comparison, a fiction after year five. The $351,186 is what you renegotiate. Renewed at a hypothetical 6.5% over the remaining 20 years, the payment becomes $2,600.53; renewed at 3.5%, it drops to $2,032.18. The renewal rate moves your payment far more than anything you did during the first term.

Renewal is not an edge case in Canada: the Bank of Canada estimated that about 60% of all outstanding mortgages would come up for renewal in 2025 or 2026. What happens at renewal depends on where you take the loan.

For a new mortgage or a refinance, federally regulated lenders must qualify you at the minimum qualifying rate: the greater of your contract rate plus 2 percentage points or 5.25%. OSFI's floor remains in force in 2026 — the regulator reviews it at least annually and left it unchanged at its most recent review — and insured mortgages are tested against the same formula under the Department of Finance benchmark. On the default example, a 4.5% contract rate means qualifying at 6.5%: the lender checks that you could carry $2,679.30 a month, about $465 more than the actual $2,213.89 payment.

At renewal, two exemptions matter. Renewing with your existing lender does not trigger the test — requalification applies at origination, not at same-lender renewal. And since November 21, 2024, OSFI no longer prescribes the qualifying rate for straight switches of uninsured mortgages — moving an existing loan to another federally regulated lender with no increase in the loan amount or the remaining amortization, though up to $3,000 may be added to the balance to cover transaction costs. The stress test was narrowed, not abolished — new money, refinances, and any increase to the amortization or balance still trigger it.

The Canadian minimum down payment is tiered, not flat: 5% of the first $500,000 of the purchase price, plus 10% of the portion above that. A $700,000 home therefore needs at least $45,000 — 6.43%, not 5%. At $1,500,000 or more, mortgage default insurance is unavailable, so a 20% down payment is required in practice. The cap on insurable prices was raised from $1 million to below $1.5 million on December 15, 2024.

With less than 20% down (loan-to-value above 80%), mortgage default insurance from CMHC or the private insurers Sagen and Canada Guaranty is required. The premium is charged on the total loan and set by the loan-to-value band.

A 0.20-percentage-point surcharge is added on top of these tiers when an insured mortgage takes a 30-year amortization — an option open to all first-time homebuyers and all buyers of new builds since December 15, 2024. Concretely: a $500,000 home with the minimum $25,000 down leaves a $475,000 loan at 95% LTV, so the premium is 4.00%, or $19,000. The premium can be added to the mortgage, making the balance $494,000; at the example 4.5% rate over 25 years, that lifts the payment from $2,629.00 to $2,734.16. This calculator does not add the premium automatically — if your down payment is under 20%, work out the premium from the table and raise the home price input by that amount so the loan reflects it. In Ontario, Quebec, and Saskatchewan, provincial sales tax on the premium cannot be added to the loan; it is cash due at closing.

Variable rates use different math. The semi-annual conversion this calculator applies is the fixed-rate convention; variable-rate mortgages commonly compound monthly, so their payment arithmetic legitimately uses rate/12. Running a variable quote through this page will understate the payment slightly.

Breaking a fixed term costs money. At major lenders, the prepayment charge on a closed fixed-rate mortgage is the greater of three months' interest on the amount prepaid or the interest rate differential (IRD) for the remainder of the term; on a variable-rate mortgage it is three months' interest. Big banks typically compute IRD from their posted rate for the time remaining, less your original discount — not from today's discounted rates — which can make the penalty far larger than a three-months estimate. Only your lender can quote the exact figure. Short of breaking the term, closed mortgages carry annual prepayment privileges — lump sums and payment increases without charge — commonly in the 10–20% a year range, but the exact allowance is lender- and product-specific.

Other limits: the calculator does not add CMHC premiums or the sales tax on them; it models monthly payments only, although accelerated bi-weekly and weekly schedules are standard Canadian options built on the same rate conversion; and it never supplies a market rate. The rate is yours to enter, because published current rates go stale quickly and the rate you are actually offered depends on your file.