Frequently asked questions

What's the difference between the term and the amortization?

The amortization is how long until the mortgage is gone entirely — commonly 25 years. The term is how long your current rate and contract are locked in, usually one to five years. When the term ends you renew whatever balance is left at whatever rates exist then, which is why this tool shows your balance at renewal as well as your payment. Almost nobody in Canada keeps one rate for the whole amortization, so treat the long-run interest figure as a what-if rather than a forecast.

Why does this payment differ from a US-style calculator?

Canadian fixed-rate mortgages are compounded semi-annually rather than monthly, which is a legacy of the Interest Act. The effective monthly rate works out slightly below the annual rate divided by twelve, so a calculator built on American assumptions will quote you a payment that's a little too high. This one uses the Canadian convention. Variable-rate mortgages are generally compounded monthly instead, so a variable quote from your lender may differ slightly from what you see here.

How much do I actually need for a down payment?

The federal minimum is five percent of the first $500,000 of the price, ten percent on any portion between $500,000 and $1.5 million, and twenty percent once the price reaches $1.5 million. Below twenty percent you need mortgage default insurance, which is not available at all above the $1.5 million mark. That creates a sharp step: a home just under the cap can work with far less cash than one priced slightly above it.

Is mortgage default insurance a monthly cost?

No, and this is where American comparisons mislead people. CMHC, Sagen, and Canada Guaranty charge a one-time premium calculated as a percentage of the mortgage, and it's normally added to the principal rather than billed monthly. It never falls off the way US private mortgage insurance does once you build equity — you carry it and pay interest on it for the full amortization. Several provinces also charge sales tax on the premium itself, and that portion has to be paid in cash at closing because it can't be financed.

What is the stress test and does it apply to me?

Federally regulated lenders must qualify you at the higher of your contract rate plus two percent or a fixed floor rate, so you have to demonstrate you could carry a payment larger than the one you'll actually make. It applies to new mortgages and refinances. Since November 2024 it no longer applies to a straight switch to a new lender at renewal where the amount and amortization stay the same. Provincial credit unions and private lenders sit outside the federal rules and set their own standards.

What isn't included here?

Closing costs. Land transfer or property transfer tax is usually the largest of them and varies by province, with an extra municipal layer in Toronto and rebates available to first-time buyers in several provinces. Legal fees, title insurance, the home inspection, moving, and any sales tax on a default insurance premium all sit outside this calculator too. Utilities and heating aren't included either, though lenders do count heating when they assess your ratios.