How this is worked out
Payments use the standard amortization formula, applied monthly:
M = P · r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)
where P is the amount borrowed, r is the annual rate divided by twelve, and n is the number of months in the amortization period. One Canadian detail worth knowing: fixed-rate mortgages are legally compounded semi-annually rather than monthly, which makes the true cost very slightly lower than a monthly-compounded calculation suggests. The difference is a few dollars a month and this calculator uses the simpler monthly convention.
Property tax, home insurance and condo fees are added as monthly amounts. CMHC insurance is really a one-off premium added to your loan; it is spread monthly here so that the figures stay comparable across markets.
A worked example
- Home price
- $700,000
- Down payment (15%)
- $105,000
- Mortgage amount
- $595,000
- Rate / amortization
- 4.9% over 25 years
- Monthly payment
- $3,437.03
- Property tax ($5,600/yr)
- $466.67
- Home insurance
- $95.00
- Total each month
- $3,998.70
The term is not the amortization, and confusing them is expensive
Canadian mortgages separate two things that Americans treat as one. The amortization is how long it takes to pay the mortgage off — typically twenty-five years. The term is how long your current rate and conditions last — typically five years. At the end of the term you renew, at whatever rates exist then.
So the total interest figure here assumes today’s rate holds for the whole amortization, which it will not. It is a comparison tool, not a forecast. What you can rely on is the monthly payment for the length of your current term.
The prudent test is to re-run this at two or three points higher and check the payment is still manageable. That is roughly the federal stress test, and it exists precisely because renewal shock is the main risk in a Canadian mortgage.
CMHC insurance and the down payment rules
If your down payment is less than twenty per cent, mortgage default insurance is mandatory — from CMHC, Sagen or Canada Guaranty. It protects the lender, not you, and the premium rises sharply as the down payment falls: roughly 2.8% of the loan at 15% down, and around 4% at the 5% minimum.
The premium is normally added to the mortgage rather than paid up front, so you pay interest on it for the whole amortization. On a $595,000 mortgage a 2.8% premium is about $16,660 added to the balance — and at 4.9% over twenty-five years that costs considerably more than the premium itself.
There are hard rules worth knowing: the minimum down payment is 5% on the first $500,000 and 10% on the portion above it, and insured mortgages are capped at a 25-year amortization. This calculator approximates the premium as a monthly rate; use it to understand the shape of the cost and get the exact premium from your lender.
Accelerated payments are the easiest win available
Most Canadian lenders offer accelerated bi-weekly payments: half the monthly amount every two weeks. Because there are twenty-six two-week periods in a year rather than twenty-four, you make the equivalent of one extra monthly payment annually without noticing it.
On a typical twenty-five-year mortgage that alone shortens the amortization by roughly three years and saves tens of thousands in interest. It is the same effect as the extra payment field above, arranged so that you never have to decide to do it.
Most lenders also allow a lump-sum prepayment of ten to twenty per cent of the original principal each year without penalty, usually on the anniversary. Worth confirming your specific privileges, because they vary more between Canadian lenders than people expect.
Closing costs are not in this number
Land transfer tax is the big one, and it differs by province — Toronto charges both a provincial and a municipal one. First-time buyer rebates exist in Ontario, British Columbia and Prince Edward Island and are worth checking.
Add legal fees, a title search, a home inspection, and an adjustment for prepaid property tax. Budget one and a half to four per cent of the purchase price in cash, on top of the down payment.
Assumptions and sources
- Amortization formula
- Standard annuity formula applied monthly. Canadian fixed mortgages compound semi-annually by law; the difference from this monthly convention is a few dollars a month.
- Minimum down payment
- 5% on the first $500,000 and 10% above it; insured mortgages capped at 25-year amortization. checked 2026-08
- CMHC premium rates
- Approximately 2.8% at 15% down rising to about 4.0% at 5% down. Confirm the current schedule with CMHC or your lender. checked 2026-08
- Property tax
- You enter your own figure. Set municipally and varies widely.