Canada Mortgage Payment Calculator

Mortgage default insurance is compulsory in Canada whenever the down payment is under 20% of the purchase price. It protects the lender, and the premium is yours to pay.

• Minimum down payment is 5% on the first portion of a qualifying home price and a higher percentage above that threshold.
• Premiums typically run from about 2.8% to 4% of the loan depending on the loan-to-value ratio, with the highest rate applying to the smallest down payments.
• The premium may be paid at closing or added to the principal - capitalising it means interest accrues on it for the entire amortization.
• Insurers include CMHC, Sagen and Canada Guaranty - the requirement is a regulatory one, so the provider does not change whether you pay.
• With 20% or more down, insurance is not required and you gain access to a wider range of lenders and terms.

Note. Premium rates and qualifying rules change. Confirm current figures with a lender or broker before relying on a specific percentage.

New Canadian borrowers routinely confuse these, and the difference matters enormously.

• Most borrowers renew several times over one amortization - five 5-year terms span the whole 25 years.
• The rate at renewal is unknown when you sign, so a plan that only works at the current rate is not a plan.
• Shorter terms give more chances to adjust but expose you to rate risk sooner.
• Longer fixed terms cost more in general, in exchange for certainty over a longer stretch.

Because the term is short and the amortization long, you should model payments at more than one future rate rather than assuming today's rate persists to the end.

• Open mortgages permit extra repayment at any time without charge but carry a higher rate.
• Closed mortgages are cheaper but restrict overpayment - most allow around 10% of the original principal each year, plus sometimes a payment increase of up to 100%.
• Variable mortgages are usually closed with prepayment room, which suits borrowers who intend to overpay.
• Breaking a fixed mortgage early commonly costs the greater of three months' interest or an interest rate differential calculation - the latter can be large when rates have fallen since you signed.
• Switching lenders at renewal is normal and often advantageous, though discharge and setup costs apply.

1. You must qualify above your actual rate. Lenders assess your ability to repay at a rate several percentage points higher than the one you will actually pay.
2. The purpose is resilience - it reduces the share of borrowers who would be unable to afford higher payments when rates rise.
3. It lowers borrowing capacity relative to what the raw payment calculation would suggest, sometimes substantially.
4. It applies regardless of term and to insured and conventional mortgages alike.
5. Provincial and federal rules change - the qualifying margin and benchmark have been adjusted more than once, so confirm the current requirement.

Note. If the stress test limits your budget, the useful responses are a larger deposit, a lower-priced property, a stronger down payment ratio, or reduced debt - not a higher quoted rate.

• Land transfer tax is payable to the province, and municipalities such as Toronto and Vancouver charge an additional levy on top.
• First-time buyer rebates exist federally and provincially and can be substantial, but have price caps.
• Legal fees, title insurance, disbursements and adjustments for property taxes and utilities are all payable at closing.
• GST or HST applies to new construction, with a rebate for owner-occupied new homes.
• Property tax and insurance are ongoing and are separate from the mortgage payment - lenders usually collect them via escrow.
• Condo fees can rival the mortgage payment and are assessed separately for affordability.

Budgeting only for the mortgage payment understates the true monthly cost. Property tax, insurance and any condo fees should be added before judging affordability.