Canadian Mortgage Calculator

Canada's federal Interest Act requires that any mortgage with a rate quoted "per annum," charged more often than annually, be compounded at most semi-annually unless a higher frequency is explicitly agreed — a rule that has stayed on the books for fixed-rate mortgages since the 19th century. In practice, that means a Canadian lender's posted annual rate compounds twice a year before being converted into a monthly figure for the actual payment, rather than simply being divided by 12 the way a US or UK mortgage typically is. The difference is small in percentage terms but real and legally mandated — not a rounding artifact — and it means the same posted rate produces a very slightly higher monthly payment in Canada than the identical rate would under monthly compounding.

Canadian mortgages separate two timeframes that a US 30-year fixed-rate loan collapses into one. The amortization is the full schedule the loan is calculated to pay off over — commonly 25 to 30 years, much like the US convention. The term is much shorter: usually one to five years (five is by far the most common), and it is only the length of the current rate commitment, not the whole loan. When the term ends, the remaining balance must be renewed — refinanced, in effect — at whatever rates and conditions the lender offers at that time, or moved to a different lender entirely. A Canadian homeowner can therefore go through several rate renewals over the life of a single mortgage, something a US borrower locked into one 30-year rate never has to think about.

Canada sets minimum down payments on a sliding scale tied to the purchase price, with mortgage default insurance required whenever the down payment falls short of 20%.

For years, insured mortgages (anything under 20% down) were capped at a 25-year amortization, while uninsured mortgages could stretch to 30. That has loosened somewhat: since late 2024, federal rule changes allow first-time homebuyers, and buyers of newly constructed homes generally, to qualify for a 30-year amortization even on an insured mortgage, up to the $1,500,000 insured price ceiling — spreading payments over five extra years to ease monthly affordability, at the cost of more total interest paid over the life of the loan.

Federally regulated Canadian lenders are required, under a guideline from the Office of the Superintendent of Financial Institutions (OSFI), to qualify every borrower at a rate higher than the actual contract rate they will pay — the greater of the contract rate plus two percentage points, or a fixed minimum floor set by the regulator. The purpose is to confirm a borrower could still afford the payment if rates rise or income drops, before the loan is ever issued; it applies to both insured and uninsured mortgages, though a borrower who renews with the same lender at the end of a term is generally not required to pass the test again, while switching lenders at renewal does trigger it.