How is my mortgage payment calculated in Canada?
Canadian fixed-rate mortgages compound interest twice a year, not monthly like in the US. That's why US calculators often show a slightly different number. Your payment depends on four things:
- The mortgage amount: the price minus your down payment, plus the CMHC insurance premium if you put down less than 20%.
- The interest rate your lender gives you.
- The amortization: how many years until the mortgage is paid off, usually 25. First-time buyers and buyers of new builds can get 30 years on an insured mortgage.
- How often you pay. Accelerated bi-weekly payments add up to one extra monthly payment a year, which takes years off the mortgage.
What is the minimum down payment in Ontario?
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% |
| $500,000 to $1.5 million | 5% of the first $500,000 + 10% of the rest |
| $1.5 million or more | 20% |
On a $600,000 home that's $25,000 + $10,000 = $35,000. The calculator warns you if you go below the minimum.
How much is CMHC mortgage insurance?
If you put down less than 20%, your lender needs mortgage default insurance. The premium is a percentage of the mortgage, added to the loan:
| Down payment | Premium |
|---|---|
| 5% to 9.99% | 4.00% |
| 10% to 14.99% | 3.10% |
| 15% to 19.99% | 2.80% |
| 20% or more | None |
A 30-year amortization adds 0.20%. The part people miss: Ontario charges 8% provincial sales tax on the premium, and you pay that in cash on closing day. It can't go on the mortgage. On a $600,000 home with 10% down, that's about $1,339.
Is my payment the same as what I qualify for?
No. The calculator shows what you'd pay. Your lender decides what you can borrow, and it qualifies you at a higher stress test rate: the greater of 5.25% or your rate plus 2%. A $540,000 mortgage at 4.5% costs about $3,081 a month, but the lender checks that you could carry it at 6.5%, which is closer to $3,729. My post on how much house you can afford in London walks through that math with real incomes.
What does the calculator leave out?
- Closing costs: land transfer tax, legal fees, title insurance and adjustments. Usually 1.5% to 4% of the price, paid in cash.
- Utilities and home insurance. You can add insurance in the calculator if you have a quote.
- Repairs and maintenance. A common rule of thumb is 1% of the home's value a year on an older house.
Want the Real Number, Not an Estimate?
I can connect you with a mortgage specialist I trust for a pre-approval, then show you what that budget buys in London or St. Thomas
548 490 4577