- Your payment is fixed for the term, but the split between principal and interest moves every single month.
- A 20% down payment removes mortgage default insurance in Canada and is the threshold most lenders price around.
- Shortening the term costs more per month and saves far more in total interest than a small rate improvement does.
- The quoted payment excludes property tax, insurance and condo fees — budget roughly 1–1.5% of the home price a year on top.
How the mortgage calculator works
Enter a home price, a down payment, an interest rate and an amortization, and the calculator returns the level monthly payment that clears the loan over that amortization. Whenever the down payment is under 20%, mortgage default insurance is required, priced by loan-to-value band, and added to the loan amount before the payment is calculated — the loan you see includes it. Everything after that is a function of the rate and the number of payments.
The payment shown is principal and interest only. Property tax, home insurance and condo fees are real monthly costs and are usually collected alongside the mortgage, so they are available under Advanced options — turn them on and the headline figure becomes the total you actually pay each month.
The stress-test row shows the payment lenders actually underwrite against: the greater of a fixed floor and your rate plus a fixed spread, per OSFI Guideline B-20. It is not the payment you make — it is the payment a lender checks you can afford before approving the rate you asked for.
The amortization schedule below the calculator shows where each payment goes. Early on, most of it is interest; the crossover point where principal overtakes interest arrives later than most buyers expect, which is the single most useful thing a schedule tells you.
The math
The monthly payment comes from the standard level-payment amortization formula: P = L · r · (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where L is the loan amount (including any mortgage default insurance premium), r is the effective monthly rate, and n is the number of monthly payments. That payment never changes over a fixed-rate amortization.
Each month, interest is charged on the balance still outstanding — balance × r — and whatever is left of the payment reduces the principal. Because the balance falls every month, the interest portion falls with it and the principal portion grows, which is why the split shifts so sharply over a long amortization. The schedule below applies that month by month and rolls the result up into years.
Canadian fixed-rate mortgages compound semi-annually rather than monthly, under the *Interest Act*: the nominal rate is applied twice a year, then converted to an effective monthly rate — r = (1 + nominal ÷ 2)^(1⁄6) − 1 — which is what this calculator uses, and what makes a Canadian payment very slightly lower than the same nominal rate compounded monthly would suggest.
Mortgage default insurance is required whenever the down payment is under 20%. The premium is a percentage of the loan set by loan-to-value band — 2.8% up to 85% LTV, 3.1% up to 90%, 4.0% up to 95%, plus 0.2 points if the amortization is stretched to 30 years — and it is added to the loan before the payment is calculated, not billed separately. The minimum down payment is itself tiered: 5% on the first $500,000 of price and 10% on the portion up to $1.5 million, above which the home can't be insured and 20% down is the practical floor.
Worked example
On a $550,000 home with $110,000 down (20%), the loan is $440,000 and no insurance is required. At 6.5% over a 25-year amortization that is a payment of about $2,947 a month, $884,167 paid in total, and $444,167 of it interest.
Hold everything else and shorten the amortization to 20 years and the payment rises to roughly $3,258, but total interest falls to about $341,968 — $311 more a month buying back $102,199. The lender's own stress test, at the greater of a 5.25% floor and the contract rate plus 2 points, would check this borrower could afford the 25-year payment at 8.5%: about $3,500 a month.
Drop the down payment to 5% ($27,500) on the same home instead: the base loan is $522,500, the LTV crosses 95%, so a 4.00% mortgage default insurance premium adds $20,900 — a loan of $543,400, not $522,500. That $20,900 is the exact cost this calculator used to leave out.
Key terms
- Principal
- The amount you still owe. Every payment reduces it by whatever is left after that month’s interest is covered.
- Amortization period
- The total time it takes to pay the mortgage down to zero at the current payment — 25 or 30 years is typical in Canada, and it is not the same thing as the term of your rate contract.
- Mortgage default insurance
- Required in Canada on any mortgage with less than 20% down. It protects the lender, not you, and the premium is normally added to the loan.
- Amortization schedule
- The period-by-period table of how much of each payment goes to principal, how much to interest, and what balance is left.