The formula
How it works
Estimate the monthly payment on a Canadian mortgage. Canadian fixed-rate mortgages compound interest semi-annually rather than monthly, so the calculator uses the correct effective monthly rate to give an accurate payment.
FAQ
Why is a Canadian mortgage different?
By law, Canadian fixed-rate mortgages compound interest twice a year, not monthly as in the US. That makes the effective monthly rate slightly lower than simply dividing the annual rate by twelve, so the payment is a touch smaller. This calculator applies the semi-annual convention.
What is amortization versus term?
Amortization is the total time to pay the mortgage off in full, often 25 years in Canada. The term is the length of your current rate agreement, usually a few years, after which you renew at a new rate. This calculator uses the amortization period to compute the payment; the term matters when you renew.
How much down payment do I need in Canada?
The minimum is 5% on the first $500,000 of the purchase price and 10% on the portion above that, up to $1.5 million, where higher-priced homes require at least 20% down. A larger down payment lowers your loan amount and can help you avoid mortgage default insurance.
Do I need mortgage default insurance?
If your down payment is less than 20% of the purchase price, Canadian lenders require mortgage default insurance, typically from CMHC. The premium is usually added to your loan amount, which slightly raises the payment this calculator would show if it were included.
What happens when my mortgage term ends?
At the end of the term, usually 3 to 5 years, you renew your mortgage at whatever rate is then available, even though the amortization period keeps counting down. Your payment can go up or down at renewal depending on how rates have moved.
Should I choose a fixed or variable rate?
A fixed rate locks in the same interest rate for the whole term, giving predictable payments, while a variable rate moves with the lender’s prime rate and can rise or fall. This calculator assumes a fixed rate, since that is what the semi-annual compounding rule applies to most directly.
Does this include property tax and other costs?
No, this calculator only estimates the principal and interest payment on the loan itself. Property tax, home insurance and, where required, mortgage default insurance premiums are separate costs that add to your total monthly housing expense.
About the Canadian mortgage calculator
This calculator estimates the monthly payment on a Canadian fixed-rate mortgage. The key difference from a US mortgage is that Canadian fixed mortgages are, by law, compounded semi-annually rather than monthly. That changes the effective monthly interest rate slightly, and using the US method would overstate the payment. The calculator applies the correct Canadian convention for an accurate figure.
How to use it
Enter the home price, your down payment, the interest rate and the amortization period in years — 25 years is standard in Canada. The calculator computes the effective monthly rate under semi-annual compounding and returns the monthly payment, the total interest and the total cost. For example, a $500,000 home with $100,000 down at 5% over 25 years yields a payment in the low $2,300s.
The formula
The effective monthly rate is , which converts the semi-annually compounded annual rate into a monthly figure. That rate then feeds the standard amortization payment , where is the loan (price minus down payment) and the number of monthly payments over the amortization period.
Where it is used
Canadian home buyers use it to estimate payments accurately, since generic mortgage calculators that assume monthly compounding give slightly wrong numbers. Mortgage brokers and lenders in Canada use the same semi-annual basis. It is useful for budgeting, comparing amortization lengths, and understanding how the Canadian compounding rule quietly affects what you pay each month.