Mortgage Calculator

How to Use This Mortgage Calculator

Select your country (Canada or US), enter your home price, down payment, amortization period, and interest rate. Results update instantly. For Canada, we also calculate your CMHC insurance premium (if applicable) and stress test qualifying payment.

Canada vs US: Key Differences

Canada uses semi-annual compounding by law (Interest Act). The effective monthly rate is calculated as:

r = (1 + annual rate / 2)^(1/6) − 1

United States uses monthly compounding: r = annual rate / 12

Both use the standard amortization formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]

What Is CMHC Insurance? (Canada)

If your down payment is less than 20% in Canada, you must purchase mortgage default insurance through CMHC (or Sagen/Canada Guaranty). The premium is added to your mortgage principal:

• 5%–9.99% down → 4.00% of loan amount
• 10%–14.99% down → 3.10% of loan amount
• 15%–19.99% down → 2.80% of loan amount
• 20%+ down → No CMHC required

What Is the Mortgage Stress Test? (Canada)

Canadian lenders must qualify you at the higher of: your contract rate + 2%, or 5.25%. This stress test payment is shown so you can see what rate you must qualify at — your actual payment will be lower.

Tips for Getting a Lower Mortgage Payment

• Increase your down payment to 20%+ to avoid CMHC insurance (Canada)
• Shop lenders — even 0.25% rate difference saves thousands over 25 years
• A shorter amortization (e.g. 20 years vs 25) saves significant interest
• Improve your credit score before applying

Understanding Amortization: Why It Matters So Much

Amortization is the length of time it takes to pay off your mortgage in full. In Canada the maximum for insured mortgages (less than 20% down) is 25 years; uninsured mortgages can go up to 30 years. In the US, 15 and 30-year terms are most common.

The amortization period dramatically affects both your monthly payment and total interest paid. Consider a $600,000 mortgage at 5.5%:

• 25-year amortization: ~$3,660/month — total interest: ~$498,000
• 20-year amortization: ~$4,100/month — total interest: ~$384,000
• 15-year amortization: ~$4,900/month — total interest: ~$282,000

Choosing 20 years over 25 costs ~$440 more per month but saves over $114,000 in interest. Use the amortization table above to see the year-by-year breakdown for your specific situation.

Fixed vs Variable Rate Mortgages

Fixed rate mortgages lock your rate for the full term (typically 1–5 years in Canada, up to 30 years in the US). Your payment never changes during the term — predictable budgeting, but generally a higher rate because the lender absorbs the risk of rate increases.

Variable rate mortgages move with the lender's prime rate, which tracks the Bank of Canada or US Federal Reserve policy rate. Variable rates have historically been lower over long periods but carry the risk of payment increases — as borrowers experienced sharply in 2022–2023. Your risk tolerance and budget flexibility should guide this decision more than rate forecasts.

How Lenders Assess Your Mortgage Application

Credit score: In Canada, 680+ is required by most lenders; 720+ gets the best rates. In the US, conventional loans require 620+, and the best rates go to borrowers with 740+.

Gross Debt Service (GDS) ratio (Canada): The percentage of gross monthly income going toward housing costs (mortgage + property tax + heat + 50% of condo fees). Lenders want this below 32–39%.

Total Debt Service (TDS) ratio (Canada): All debt payments including housing. Most lenders cap this at 44%. The US equivalent (DTI) should stay below 43%.

Employment history: Lenders prefer at least two years of stable employment. Self-employed borrowers typically need two years of Notice of Assessments (Canada) or tax returns (US).

Down payment source: Lenders require proof the down payment has been in your account at least 90 days, or a gift letter if it came from family. Borrowed down payments are not allowed for high-ratio mortgages.

First-Time Home Buyer Programs

Canada — First Home Savings Account (FHSA): Introduced in 2023, allows first-time buyers to contribute up to $8,000/year (lifetime max $40,000) in a tax-sheltered account for a first home purchase. Contributions are tax-deductible; qualifying withdrawals are tax-free.

Canada — Home Buyers' Plan (HBP): Withdraw up to $35,000 from your RRSP ($70,000 per couple) for a down payment, repayable over 15 years.

US — FHA Loans: Down payments as low as 3.5% for borrowers with 580+ credit scores. Requires mortgage insurance premiums but accessible to buyers who don't qualify for conventional loans.

US — VA Loans: Available to eligible veterans and active-duty service members. No down payment and no private mortgage insurance required.

Mortgage Renewal and Refinancing

In Canada, mortgages renew every 1–5 years at current market rates — unlike the US where a 30-year fixed locks in your rate for the entire loan. At renewal you can switch lenders without penalty, making it the best time to renegotiate. Start shopping 4–6 months before your renewal date.

Refinancing before term-end typically triggers a prepayment penalty in Canada — either 3 months' interest or the Interest Rate Differential (IRD), whichever is greater. Always calculate the break-even point before refinancing.

Making Prepayments to Save on Interest

Most Canadian mortgages allow annual prepayments of 10–20% of the original principal without penalty. On a $500,000 mortgage at 5.5% over 25 years, a single $10,000 lump-sum prepayment at end of year one saves approximately $22,000 in interest and cuts 14 months off your amortization.

Switching to accelerated bi-weekly payments (26 payments/year instead of 12 monthly) is equivalent to one extra monthly payment per year — shortening a 25-year mortgage by about 3 years with no change to your lifestyle or budget.