Finance & Business
Canadian Mortgage Calculator
Calculate your Canadian mortgage payments with different payment frequencies, CMHC insurance, and semi-annual compounding. Includes down payment requirements and mortgage term options.
Enter your mortgage details to see the results
Related to Canadian Mortgage Calculator
The Canadian Mortgage Calculator helps you estimate your mortgage payments and total costs when buying a property in Canada. It incorporates unique Canadian mortgage features such as semi-annual compounding, CMHC insurance requirements, and flexible payment frequencies. The calculator follows Canadian mortgage regulations and standards, including minimum down payment rules and maximum amortization periods.
Semi-Annual Compounding
Canadian mortgages use semi-annual compounding, unlike other countries that use monthly compounding. This means interest is calculated and compounded twice per year. The effective annual rate is calculated as: EAR = (1 + r/2)² - 1, where r is the annual interest rate.
Payment Frequency Options
The calculator supports three payment frequencies: - Monthly: 12 payments per year - Bi-weekly: 26 payments per year (payment = monthly × 12/26) - Accelerated Bi-weekly: 26 payments per year (payment = monthly × 13/12)
The calculator also includes Canadian-specific features such as CMHC insurance calculations based on down payment percentage, minimum down payment requirements (5% up to $500,000, 10% for the portion above $500,000), and separate inputs for mortgage term and amortization period.
Canadian mortgages have some unique terminology and features that are important to understand. The mortgage term (typically 5 years) is different from the amortization period (up to 30 years). The term is the length of your mortgage contract and rate agreement, while the amortization period is the total time to repay the loan completely.
CMHC Insurance
CMHC (Canada Mortgage and Housing Corporation) insurance is required for down payments less than 20%. The premium rates are: - 4.00% for down payments of 5-9.99% - 3.10% for down payments of 10-14.99% - 2.80% for down payments of 15-19.99% - 0% for down payments of 20% or more
Down Payment Rules
Minimum down payment requirements in Canada: - 5% for homes $500,000 or less - 5% for the first $500,000 plus 10% for the portion above $500,000 - 20% for homes $1 million or more
1. What is the difference between bi-weekly and accelerated bi-weekly payments?
Bi-weekly payments split your monthly payment into two payments (monthly payment × 12/26), while accelerated bi-weekly payments are slightly higher (monthly payment × 13/12 ÷ 26). Accelerated bi-weekly payments result in an extra monthly payment per year, helping you pay off your mortgage faster and save on interest.
2. Why do I need CMHC insurance?
CMHC insurance protects lenders against mortgage default and is required by law for down payments less than 20%. While it adds to your mortgage costs, it allows you to purchase a home with a smaller down payment. The insurance premium is typically added to your mortgage amount and paid over the life of the loan.
3. How does semi-annual compounding affect my mortgage?
Semi-annual compounding means interest is calculated twice per year instead of monthly. This typically results in slightly lower effective interest rates compared to monthly compounding. For example, a 5% mortgage rate with semi-annual compounding has a lower effective annual rate than the same nominal rate with monthly compounding.
4. Why are mortgage terms typically 5 years in Canada?
The 5-year mortgage term is most common in Canada because it offers a balance between rate stability and flexibility. It allows homeowners to renegotiate their mortgage every five years to take advantage of better rates or change lenders, while providing enough stability to make long-term financial plans. The term is separate from the amortization period, which is typically 25-30 years.
5. What is the scientific source for this calculator?
This calculator follows the official standards and formulas established by the Canada Mortgage and Housing Corporation (CMHC) and the Canadian banking industry. The semi-annual compounding calculations are based on the Interest Act of Canada (R.S.C., 1985, c. I-15), which mandates semi-annual compounding for mortgage interest calculations. The CMHC insurance premiums and down payment requirements are sourced directly from CMHC's official documentation and policies. The mortgage payment calculations use the standard time value of money formulas adapted for semi-annual compounding, as documented in Canadian financial mathematics textbooks and the Canadian Institute of Actuaries' standards of practice.