Mortgage Payment Calculator

Buying a home involves a lot of financial planning to ensure you can comfortably afford your mortgage payments. Use our mortgage calculator to estimate your mortgage payments and easily budget for this expense, making the process simpler. Use our mortgage payment calculator to estimate your mortgage payments using the asking price, down payment, amortization, and payment frequency.

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Key Takeaways

• A mortgage payment is the amount paid towards the mortgage principal and interest until the balance is fully repaid.
• Mortgage payments are calculated based on the length of the amortization, interest rate, and the term for which your rate is guaranteed.
• Use our mortgage payment calculator to estimate how your mortgage payments could affect your budget.

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What Is A Mortgage Payment?

A mortgage payment is the amount you will pay toward your mortgage until the borrowed amount plus interest is fully repaid. You can choose payment frequencies that range from monthly, biweekly, weekly, accelerated weekly, or accelerated biweekly. 

The amount you will pay as a mortgage payment is calculated based on the length of the amortization, the interest rate, and the term for which your interest rate is guaranteed. 

Fixed-rate mortgages make it easier to estimate and budget for your mortgage payments, including the total interest paid. Fixed rates are more accurate for determining your carrying costs as the interest and principal amounts stay the same throughout the term. 

If you choose a variable-rate mortgage (VRM), your payments stay consistent throughout the term. However, there is no way to determine actual interest-carrying costs since rates are not likely to remain constant throughout the term. 

If you choose an adjustable-rate mortgage (ARM), the interest rate and the monthly mortgage payment amount will likely change over the term. Your total mortgage payment amount should only be viewed as an estimate for budgeting purposes.  

How To Use A Mortgage Payment Calculator

Our Canadian mortgage calculator tool allows you to input the details of the home you wish to purchase to estimate the amount of your mortgage payments. Based on your down payment input, the calculator will also show you if mortgage default insurance (CMHC) is required. 

To estimate and calculate mortgage payments, all you need to know is the purchase or asking price of the home, the amount you have for a down payment (if you’re not sure or want to run scenarios, you can use a set percentage amount), amortization period, and payment frequencies. 

Asking Price: Enter the purchase or asking price of the home here.

Down Payment: Enter the exact amount available for a down payment here. You can also select a percentage of the asking price to run scenarios and see the impact your down payment has on mortgage payments.

Amortization Period: This is the life of the entire mortgage. The longer the amortization you select, the lower your mortgage payment. You will pay more interest-carrying costs over the life of the mortgage by extending your amortization period.  

If your down payment is less than 20%, your maximum amortization is limited to 25 years. If you are putting down 20% or more, you can select up to 30 years. 

Payment Frequency: Select the frequency you wish to make mortgage payments in the drop-down here. 

Note: Accelerated payment frequencies can save you time and interest on your mortgage. 

Mortgage Rate: You can use the pre-selected rates by selecting the drop-down to adjust the term length (5-year terms being the most popular). Explore changes in the interest rate by selecting different term lengths to see what impact the rate has on your mortgage payments. 

Note: If you already have a rate different from the pre-selected rates, you can enter it in the custom field. 

Property Taxes (optional): Enter the annual property taxes for the property here if you wish to estimate your total mortgage payment, including property taxes. 

Condo Fees (optional): Enter the monthly condo/maintenance fees here if you are purchasing a condo. This will estimate your total mortgage payments with your potential maintenance fees added for budgeting purposes. 

How Much Down Payment Do I Need?

The minimum amount you need for a down payment depends on the purchase price of the home. 

Purchase Price	Minimum Down Payment Required
$0 – $500,000	5%
$500,001 – $999,999.99	5% on the first $500,000 and 10% on the remaining amount
$1,000,000 +	20%

The size of your down payment will determine your loan-to-value (LTV) ratio. This ratio is the most important factor in mortgage rate pricing with either insured or insurable lending criteria. The LTV ratio will also determine whether you need to purchase mortgage default insurance. 

Why Choose a 5% Down Payment

A 5% down payment is the minimum amount needed to obtain a mortgage in Canada when the property is priced under $500,000. Choosing a 5% down payment can be a great option for first-time buyers looking to become homeowners. This lowest entry point will also give you access to the best rates. 

Why Choose a 10% Down Payment

A 10% down payment is a good choice if you’re looking to reduce your total mortgage amount while still having access to the best rates. 

Why Choose a 20% Down Payment

A 20% down payment is the minimum requirement if you’re purchasing a property priced at $1 million or more. Choosing this option will help you avoid mortgage default insurance premiums. As well, this option reduces the qualifying mortgage amount even further. While providing the possibility to extend your amortization up to 30 years; however, this higher amortization would carry a higher interest rate when compared to a 25-year amortization. 

Why Choose a Down Payment Greater than 20%

Choosing to put down more than 20% can be a great option if you want a higher purchase amount and are making up the difference with a larger down payment. If you are purchasing a property under $1 million and put down at least 35% or more you will have access to better rates than putting down 20%, 25%, 30%, or anything in between 20% and 34.99%. 

With this last option, you could avoid paying mortgage default insurance premiums. You can also choose to extend your amortization to 30 years though you will pay a higher interest rate. 

Types Of Homebuyers In Canada

Many different types of buyers exist, from first-time buyers, those purchasing a new home, to renewers and refinancers. Regardless of what type of homebuyer you are, an online mortgage calculator is a great tool to help you calculate and compare your available options and find ways to save money. 

Purchasing a New Home: 

If you’re looking to purchase a new home, the first step is to figure out how much home you can afford. If you plan to sell your current home, you can leverage the equity from the sale and use it towards your downpayment on the new home. 

Using our mortgage affordability calculator makes it easy to quickly calculate how much you can afford to purchase a new home. To get started, you will need to know your annual income and the annual income of any co-applicants, how much you have for a down payment, and the amount of your debt payments (credit cards, car loans, student loans, line of credit, and any other liabilities). 

First-time Homebuyer: 

As a first-time homebuyer, the first thing you will need to do is determine how much you have ready as a down payment. You can then run scenarios to see how much you need for a mortgage and whether you need to pay mortgage default insurance. 

Using our mortgage down payment calculator can help you quickly and easily run scenarios based on a percentage or dollar amount to determine the total mortgage amount you will need to purchase a home. 

To get started, enter the asking price of the home and select the province where the home is located. You can then easily enter either percentages or dollar amounts to test up to 3 down payment scenarios. Use these scenarios to see the impact on the mortgage default insurance you must pay and provincial taxes, if applicable. This will help you budget for the total upfront expense of purchasing a home. 

Renewer:

If you’re coming to the end of your mortgage term, you are likely shopping around for the best rates and terms to renew your mortgage. Calculate your future mortgage payments using our mortgage renewal calculator, which can help you quickly and easily estimate and run scenarios. 

Refinancing Your Mortgage: 

If you’re looking to refinance your mortgage, it’s likely to take out equity in your home, lower your interest-carrying costs, or consolidate debts. Using our mortgage refinance calculator can help you run scenarios to see what impact they have on your mortgage should you choose to refinance.

To get started, select what you are looking to do: either lower mortgage payments, access equity, or change your amortization, then enter the current property value and the balance remaining on your mortgage.   

What Type Of Mortgage Should I Choose?

Choosing the type of mortgage comes down to your financial situation and personal risk. When choosing the type of mortgage, you should also be aware of current market conditions. 

Fixed Mortgage: Fixed mortgages mean the rate you choose remains unchanged over the mortgage term. If rates should go up or down over the term, there will be no changes to your mortgage. With fixed rates, you will renegotiate a new rate at the end of each term during your amortization period.  

• Monthly interest and principal payments remain the same throughout the term, regardless of any changes to rates (increases or decreases). 
• Fixed-rate mortgage rates are linked to the bond market. When these rates go up, fixed-rate mortgages tend to do the same. 

Variable Mortgage: Variable mortgages mean your rate could change over the mortgage term. Rates can either increase or decrease based on the lender’s prime rate. Variable-rate mortgages can have either fixed or adjustable payments. 

Variable rates with fixed payments:

• If interest rates increase, more of your mortgage payment will go toward the interest portion.
• If interest rates decrease, more of your mortgage payment will go toward the principal portion. 

Variable rates with adjustable payments:

• When the lender’s prime rate changes (increases or decreases), the interest portion of your mortgage payment will adjust (increase or decrease) along with it. 

Note: Fixed payment variable mortgages are at risk of over-amortization (also known as negative amortization), whereas adjustable payment variable mortgages are not impacted in the same way as the payment is adjusted with changes in your lender’s prime rate.

Mortgage Term Length: The mortgage term is the length of time you have committed to the terms and conditions of the loan. Typically, in Canada, the most popular term length is 5 years though you can get terms as short as 6 months or as long as 10 years. It’s important to note that interest rates will vary based on the term length. 

You may see mortgage term lengths of

• 6-month
• 1-year (both variable and fixed)
• 2-year
• 3-year (both variable and fixed)
• 4-year
• 5-year (both variable and fixed)
• 7-year
• 10-year

Are fixed and variable mortgages calculated differently?

The calculation of interest on fixed and variable mortgage rates differs. Fixed rates have interest compounded semi-annually (2x a year), while variable rates have interest compounded monthly (12x a year). If everything stays the same (interest rate, amortization, mortgage balance), a variable-rate mortgage will cost you more in interest-carrying costs as the interest compounds more often. 

How To Lower Your Monthly Mortgage Payment

You can lower your mortgage payments through a larger down payment or a longer amortization. Each has its own set of benefits and potential downsides.  

You can put down a larger down payment to lower the total amount you need for the mortgage, which will lower your payments. The downside of using this option to reduce your mortgage payment is the need to have a large amount saved upfront. This option takes away from future/emergency savings. 

If you put down 20% or more as a down payment, you will eliminate the need to purchase mortgage default insurance. When you put down less than 20%, you will need to pay this insurance as a lump sum or add it to your mortgage. Paying it upfront will keep your mortgage payments lower. If you add default insurance to your mortgage, this may increase your mortgage payment. The benefit of an insured mortgage is that you’ll be entitled to the lowest rate every time you renew your mortgage throughout your amortization.

You can choose a longer amortization to lower your mortgage payments. The maximum amortization for mortgages with a down payment of less than 20% is 25 years. If you put down 20% or more, you can extend your amortization by up to 30 years. Choosing a longer amortization will reduce mortgage payments, but it will come at the cost of paying more in interest over the life of the mortgage. 

How To Access Equity On Your Mortgage

Equity is the portion of the mortgage you have already paid off, plus any appreciation in the value of your home. You can access up to 80% of your equity through a refinance. 

You can complete an equity take-out (ETO)  by setting up the amount you want to access as either a mortgage (if you need the equity for immediate use) or a line of credit (if you plan to use the equity in the future). You can use our refinance calculator to see if a refinance makes sense for your situation. 

How To Pay Less In Principal Interest On Your Mortgage

If you are trying to find ways to pay less interest on your mortgage, there are a few things you can do that will help you pay off your mortgage faster. You could increase your down payment amount to reduce your mortgage balance from the beginning to save on interest. 

You can also utilize prepayment options available on your mortgage to pay down more of the principal during the year. This will reduce your mortgage balance each time you make a prepayment and help you save on interest you would have paid over the life of the mortgage. 

If you have the means to make larger mortgage payments, you can choose a shorter amortization period that saves you on the interest-carrying costs of having a longer amortization. You can change your regular payment frequency to an accelerated payment schedule if a shorter amortization with a larger payment isn’t doable. Making a few additional payments each year will save years on the life of your mortgage and help offset some of the interest-carrying costs of having a longer amortization. 

Frequently Asked Questions