Mortgage Payment Calculator

How Canadian Mortgages Work

Canadian mortgages differ from those in many other countries in several important ways. The most significant is semi-annual compounding: under Section 6 of the Interest Act, mortgage interest in Canada must be compounded no more frequently than semi-annually. In the United States, monthly compounding is standard. The practical effect is that a Canadian 5% mortgage has a slightly lower effective rate than an American 5% mortgage, meaning marginally lower payments for the same quoted rate.

Another key distinction is the separation between term and amortization. Your amortization period (typically 25 years, or 30 on insured mortgages for first-time buyers or new builds) is the total time over which the loan is repaid. The term, however, is the length of your contract with the lender, commonly 1 to 5 years. At the end of each term, you renew your mortgage, potentially at a very different interest rate. This renewal cycle is unique to Canada and means that even a “fixed rate” mortgage carries long-term interest rate risk.

Payment on a $400,000 Mortgage at Three Example Rates (25-Year Amortization)

Example rates for illustration only, not market quotes. Payments computed with Canadian semi-annual compounding, monthly frequency, rate held constant for the full amortization — the same math this calculator uses.

The spread between those rows is the real lesson: at these example rates, each percentage point moves the monthly payment on a $400,000 mortgage by roughly $217–$228, and adds $65,043–$68,302 in total interest over a full 25-year amortization. Negotiating even a fraction of a point off your rate — or shortening your amortization — typically matters far more than the fee differences between lenders.

The renewal process is straightforward: your lender will send a renewal offer (typically 30 days before expiry), but you are not obligated to accept it. Shopping around or using a mortgage broker at renewal is one of the most effective ways to secure a better rate. Switching lenders at renewal does not incur prepayment penalties, though it will trigger the stress test. Understanding the interplay between term length, rate type, and your personal financial horizon is essential to minimizing your total interest cost over the life of your mortgage.

Payment frequency also has a meaningful impact. Standard monthly payments result in 12 payments per year. Regular bi-weekly payments split the monthly amount in half and pay every two weeks (26 payments). Accelerated bi-weekly takes half the monthly payment every two weeks, which results in the equivalent of 13 monthly payments per year, shaving roughly 3 years off a 25-year amortization and saving tens of thousands in interest.

What Changed for 2026

• Insured mortgage price cap: $1,500,000.Homes priced at $1.5 million or above cannot be purchased with mortgage default insurance, so they require a down payment of at least 20%. Below the cap, insured buyers can put down as little as 5%.
• 30-year amortization for insured mortgages. First-time buyers — and any buyer of a newly built home — can amortize an insured mortgage over 30 years instead of the standard 25. The longer schedule lowers each payment but increases the total interest paid over the life of the loan, and it carries a 0.20% premium surcharge: the insurance rate for your loan-to-value band goes up by 20 basis points (for example 3.10% becomes 3.30%), which is added to the mortgage balance. The calculator above applies that surcharge automatically when you set the amortization above 25 years.
• Minimum down payment structure. The minimum is 5% of the first $500,000 of the purchase price plus 10% of the portion between $500,000 and $1,500,000. On a $750,000 home, that is $25,000 + $25,000 = $50,000.
• CMHC premium tiers. Mortgage default insurance costs 4.00% of the loan amount at 95% loan-to-value, 3.10% at 90%, and 2.80% at 85%. The premium is added to your mortgage balance rather than paid in cash, so you also pay interest on it.
• Stress test unchanged. At federally regulated lenders you still qualify at the higher of your contract rate + 2% or the 5.25% floor. The worked example below shows what that means in dollars.

Worked Example: $500,000 Home, 20% Down, 25 Years

Here is the exact math this calculator performs, using its default inputs: a $500,000 home, a $100,000 down payment (20%), a 4.5% example rate (for illustration only — your quoted rate will differ), a 25-year amortization, and monthly payments. Because the down payment is 20%, no CMHC premium applies, and the mortgage amount is $500,000 − $100,000 = $400,000.

1. Convert the quoted rate to an effective monthly rate. Canadian fixed rates compound semi-annually, so 4.5% means 2.25% per half-year. The equivalent monthly rate is (1.0225)^1/6− 1 ≈ 0.37153% — slightly less than the 0.375% you would get by simply dividing 4.5% by 12.
2. Apply the amortization formula over 300 months. Payment = $400,000 × [r(1 + r)³⁰⁰] ÷ [(1 + r)³⁰⁰ − 1] with r = 0.0037153, which gives $2,213.89 per month.
3. Add up the full amortization. 300 payments × $2,213.89 = $664,167.55 total, of which $264,167.55 is interest— about 39.8% of every dollar paid, assuming the rate stayed the same for all 25 years.
4. Check the stress test.To qualify, the lender tests you at 4.5% + 2% = 6.5% (above the 5.25% floor). At 6.5%, the same mortgage would cost $2,679.30 per month — your income must support that payment even though you actually pay $2,213.89.
5. Optional: switch to accelerated bi-weekly.Half the monthly payment — $1,106.95 — paid every two weeks makes 26 payments a year, the equivalent of 13 monthly payments instead of 12. That extra annual payment is what shortens the payoff.

The Same House With 5% Down

The minimum down payment on a $500,000 home is 5%, or $25,000. That leaves a $475,000 loan at 95% loan-to-value, so the CMHC premium is 4.00% × $475,000 = $19,000, added to the balance for a starting insured mortgage of $494,000 — $94,000 more debt than the 20%-down scenario. As a first-time buyer or new-build purchaser, you could stretch the amortization to 30 years to lower each payment — at the cost of more total interest and a 0.20% surcharge on the insurance premium itself.