Canada Mortgage Payment Calculator

Depending on the size of your down payment, your total monthly mortgage payment could include three separate expenses:

• Principal. The principal is the original amount you borrow. If you’re buying a $400,000 home and your down payment is $50,000, the principal is $350,000.
• Interest. In exchange for letting you borrow money, lenders charge interest. Mortgage interest rates are a major factor in any long-term mortgage.
• Mortgage default insurance. If your down payment is less than 20% of the home’s purchase price, you’ll be required to buy mortgage default insurance. Your mortgage default premium will be added to your principal, which means you’ll pay interest on it.

A mortgage payment calculator can teach you a lot about what affects the cost of a mortgage. Our payment calculator can help you:

• Understand how different mortgage interest rates affect the cost of your mortgage.
• See the impact your down payment has on your monthly mortgage payment and the overall cost of your mortgage.
• Select an amortization period that aligns with your homeownership goals.
• Find a mortgage payment frequency that fits your budget.
• Decide on a term length that works for you.
• Estimate your mortgage budget before you start reaching out to lenders.

Whether you’re a first-time home buyer or a current homeowner wondering what your next mortgage might cost, you’ll find our mortgage payment calculator easy to use. Just follow these simple steps:

1. In the “Property Value” field, enter the price of the home you intend to buy or use the slide tool to indicate a price.
2. In the “Down Payment” field, enter the amount of your down payment. You can use a dollar figure or a percentage of the home’s listing price.
3. In the “Interest Rate” field, enter a potential mortgage interest rate. If you’re unsure of what value to enter, check Canada’s current mortgage rates to get an idea of a reasonable number.
4. In the “Mortgage Term” field, choose how long you’d like to go before needing to renew your mortgage.
5. In the “Rate Type” field, indicate whether your future mortgage will have a fixed or variable interest rate.
6. In the “Amortization” field, choose the total length of your mortgage loan.
7. In the “Payment Frequency” field, indicate how often you’ll make a mortgage payment.

The  payment breakdown displayed by a mortgage payment calculator gives you more insight into your amortization schedule. You’ll be able to see how much interest and how much of the principal each payment covers for every year of your amortization period. 

An amortization schedule explains how your mortgage payments evolve over the life of your home loan.

At the outset of your mortgage, most of your payment goes toward interest. But as you pay down your mortgage, the composition of those payments slowly reverses. By the time you reach the last year of your loan, most of it will be going toward the principal.

Your mortgage payment can change for several reasons. It’ll change if you increase the frequency or amount of your payments. It could also change if you refinance and secure a longer amortization period, or if you have a variable-rate mortgage and your interest rate increases.

Unless you’re approved for an open mortgage, you’ll have limited ways of paying off your mortgage ahead of schedule. A few options include:

• Making lump-sum payments. If you come into some extra cash — maybe an inheritance or tax refund, for example — you can put it toward your mortgage principal. Check with your lender regarding your prepayment limits and when lump-sum payments can be made.
• Increasing payment frequency. Making weekly or bi-weekly payments can result in paying off more of your loan each year, which will help shorten the length of your mortgage.
• Making larger monthly payments. Your lender may allow you to increase the size of your monthly payment up to a certain threshold. Be sure to check on what your prepayment threshold is to avoid paying any costly prepayment penalties. 

The first thing to do if your mortgage payment is becoming unaffordable is to call your lender or mortgage broker immediately so they can work on finding a solution. Because you’re locked into a mortgage contract, there’s only so much you’ll be able to do. 

One option may be to extend your mortgage’s amortization period. A longer amortization will generate a lower monthly mortgage payment, but you’ll pay more in interest overall. 

If you have a variable-rate mortgage and your payment has ballooned because variable mortgage rates have skyrocketed, switching to a fixed rate might help lower your mortgage payments until the end of the term. The feasibility of this move will depend on your lender’s current mortgage rates. 

The amount of your monthly payment on a $500,000 mortgage depends on the interest rate you’re offered and the amortization period you choose. At 5% and a 25-year amortization, your monthly payment would be $2,989. At 4% and 25 years, it would be $2,704. A 5% rate and a 20-year amortization would result in a monthly payment of $3,378.

Estimating mortgage payments based on a home’s price is difficult without knowing more about your finances.

If you make a significant down payment, for example, you’ll reduce your monthly mortgage costs. If your credit score is low, you might have to get a mortgage from a B lender that charges you a high interest rate, which will lead to higher monthly payments. 

Let’s say you have pristine credit, a $50,000 down payment and are offered a mortgage interest rate of 5%. A $300,000 house would cost you $1,495 a month.

But if your credit score is low, you only have the minimum down payment of $15,000, and the best rate you’re offered is 6.25%, your monthly payment would be $1,941.

The mortgage stress test has a significant impact on the size of your mortgage payment because it determines the maximum mortgage amount you can qualify for, 

The rules of the stress test state that you have to qualify for a mortgage at a rate of either 5.25% or the rate you’ve been offered plus 2%, whichever is higher. If you’re offered a rate of 5%, for example, you have to be able to afford the same mortgage at 7% to be approved.

If you can’t pass the stress test, your lender will reduce the amount of your mortgage until you can. As that amount shrinks, so will your monthly mortgage payment — but so will the amount of house you can afford. 

A mortgage payment typically includes portions that go toward the principal, the interest and mortgage default insurance. Closing costs like commissions, land transfer taxes and legal fees will need to be paid separately.

One of the key factors that determines how large a mortgage you’re offered is how much money you’re earning. If your salary is large enough that it covers all of your debts and necessities with plenty to spare, lenders will feel confident that you can handle a monthly mortgage payment of a certain size.

But if your salary is smaller, and lenders don’t think you can handle a significant mortgage payment every month, they’ll reduce the amount they offer to loan you.

If you want to extend the amortization of your mortgage to shrink your monthly payment, you’ll often have to refinance.

During a refinance, your lender may not be able to offer you the rate that was in effect when you signed your earlier mortgage. Your new rate will be based on what your lender is currently able to offer, and it could be higher than what you were previously paying. 

In some instances, your lender might allow you to extend your amortization period without refinancing, but that shouldn’t be taken for granted. Make sure you understand the short- and long-term implications of any changes you make to your mortgage.

There are several programs for first-time home buyers in Canada that can help increase their down payment savings. The Home Buyers’ Plan and First Home Savings Account are just two examples. By making a larger down payment and borrowing less, your monthly payment should also decrease.

You can learn more by checking out NerdWallet’s guide for first-time home buyers.