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Mortgage Payment Calculator Canada

Get a sense for your mortgage payments, the cash you'll need to close and the monthly carrying costs with Ratehub.ca’s mortgage payment calculator. 

Ratehub.ca's mortgage payment calculator

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WATCH: How to take advantage of future lower rates

Frequently Asked Questions

How do I use the mortgage payment calculator?


Is the mortgage payment calculator free?


Why does the down payment automatically change on the calculator?


How much is the monthly mortgage payment for a $500,000 house, over 30 years?


What is an amortization schedule?


How does my salary impact my mortgage payment?


Are mortgage payments made every month?


How do I calculate monthly payments on a mortgage?


What is mortgage default insurance?


Why does my rate change when I adjust my amortization from 25 years to 30 years?


What if I’m a first-time home buyer?


Are closing costs included in my mortgage payment result?


Why does the Land Transfer Tax output change when I select Toronto, Ontario, as my purchase location?


Find the right calculators for all your mortgage and home buying needs

WATCH: October 23, 2024 Bank of Canada announcement

Highlights from the Bank of Canada’s October 23, 2024 announcement

On October 23, 2024, the Bank of Canada lowered its trend-setting overnight rate by -0.50%, taking it from 4.25% to 3.75%. This marks the fourth consecutive rate cut since June, with a cumulative reduction of 125 basis points.

  • The central bank’s decision was driven by the continued decline in inflation, with the September Consumer Price Index (CPI) falling to 1.6%, well below the BoC’s 2% target. Concerns about weak GDP growth and falling GDP per capita also prompted a larger-than-usual cut.
  • Canadians with variable-rate mortgages and home equity lines of credit (HELOCs) will benefit as the prime rate is set to fall to 5.95%, reducing their interest payments and monthly costs.
  • Fixed-rate mortgages are influenced by bond market movements rather than directly by the BoC’s rate cuts. With five-year bond yields trending around 2.9%, lenders are expected to reduce fixed mortgage rates.
  • Although the previous rate cuts didn’t spur significant buyer activity, this cumulative 125-basis-point reduction — coupled with another potential cut in December — may entice more buyers back into the market.

October 2024: Mortgage market update

This has been a relatively year thus far for the Canadian housing market, with buyers hunkered down and waiting for lower mortgage rates. With the Bank of Canada having implemented its third policy rate cut in a row (after not having one since March 2020), taking the target for the overnight rate from 4.5% to 4.25%, home sales could well rebound over the next few months. 

Variable mortgage rates fell by roughly -0.25%, in line with the policy rate. With another rate cut expected in October, further downward pressure on mortgage rates is anticipated. 

Fixed mortgage rates are tied to the bond market, and bond yields dropped in the wake of the Bank’s third rate cut of 2024 as well as a number of Canadian and overseas economic reports. As a result, some lenders have reduced their fixed mortgage rates. 

Still, though, from a historical perspective, both fixed and variable mortgage rates continue to be elevated. If you’re looking for a mortgage rate in Canada, read on for some key information.

  • Real estate update: On October 15, 2024, the Canadian Real Estate Association (CREA) released the statistics for the housing market in September 2024. The latest data shows an uptick in market activity as lower interest rates begin to entice more buyers. A total of 37,733 residential properties were sold across the country in September, marking a 1.9% increase from August and a 6.9% rise year-over-year. The number of new listings also saw a healthy increase, up by 4.9% from August. The national average home price rose by 2.1% year-over-year to $669,630 in September, driven by renewed buyer activity and increased demand. However, the MLS® Home Price Index showed a slight monthly gain of 0.1%. The national sales-to-new-listings ratio (SNLR) slightly dipped to 51.3%, compared to 52.8% in August, indicating the market remains in balanced territory. CREA considers the market balanced when the SNLR falls between 45% and 65%, with a lower ratio favoring buyers and a higher ratio favoring sellers. As further interest rate cuts are anticipated, market experts expect this balance to maintain or tilt further in favor of buyers in the coming months.

    Read more: National home sales rise in September following summer rate cuts

  • CPI update: On October 15, 2024, Statistics Canada reported that the Consumer Price Index (CPI) rose by just 1.6% year-over-year in September. This is significantly below both the forecasted 1.8% and the Bank of Canada’s 2% target, largely driven by a -10.7% drop in gasoline prices. Mortgage interest costs, one of the biggest contributors to inflation over the past year, saw further relief in September, falling to 16.7% from 18.8% in August. As the economy shows signs of cooling, the odds of a half-point interest rate cut have increased, with many experts forecasting that the Bank of Canada will act aggressively to prevent further economic slowdown. If this happens, the borrowing costs for variable-rate mortgages and prime-based loans will lower considerably. At the same time, savers may see lower returns on products like high-interest savings accounts and guaranteed investment certificates (GICs).

    Also read: Canadian CPI falls to 1.6% in September, increasing chance of half-point rate cut

Canadian mortgage reform update

On September 16, 2024, the federal government announced sweeping changes to mortgage qualification rules for first-time home buyers, as well as those purchasing newly-constructed homes.

As of December 15, 2024:

  • 30-year amortizations will be available for all first-time home buyers, regardless of whether they have an insured mortgage. These extended amortizations are also available for any purchase of new construction.

  • The maximum purchase price for an insured mortgage (where less than 20% down is paid) will be increased to $1.5 million, from the current $1 million.

These are some of the most impactful mortgage reforms announced since 2012, and are anticipated to increase first-time home buyers’ affordability and access to the housing market. 

Learn more about these new mortgage rule changes on the Ratehub.ca blog

House affordability trends for October 2024

In August 2024, prospective homeowners experienced improved affordability across a range of Canadian housing markets. According to Ratehub.ca’s report, the recent rate cuts from the Bank of Canada, along with softer home prices, have made it easier for buyers to enter the market.

The average five-year fixed mortgage rate fell to 5.16% in August, down from 5.29% in July, with the mortgage stress test rate following suit, easing to 7.16%. These lower rates mean reduced monthly payments for many buyers. In Toronto, the income needed to purchase a home decreased by $4,850 as the average home price fell by $15,100. Similarly, in Vancouver and Victoria, affordability improved, with income requirements decreasing by $1,800 and $5,900, respectively. 

With further rate cuts expected, affordability is likely to improve in the coming months. On top of this, new mortgage rules, set to take effect in December 2024, will extend amortization periods to 30 years for first-time home buyers and raise the insured mortgage purchase cap to $1.5 million, easing the path for buyers in pricier markets.

Read more: Dropping mortgage rates improved home affordability in August

Why use a mortgage payment calculator?

When planning to buy a home, it's easy to focus on the final purchase price or your mortgage amount. But actually, the most relevant number to you will be your regular repayment. After all, your mortgage payments are the amount that you'll need to take from your paycheque each month.

What is a mortgage payment?

Your mortgage payment is the amount of money you must pay every month to pay down, and ultimately pay off, your mortgage loan. Your mortgage payment covers both the principal (the actual amount of the loan) and the interest on the loan. It can also include mortgage default insurance, also sometimes known as CMHC insurance (required when your down payment is less than 20% of the cost of your home), property taxes and other fees. When you first begin making payments, more of it goes towards covering interest, but over time, more of your payment will eventually go to paying down your mortgage balance.

What are some factors that can affect your mortgage payments? 

There are several key factors that can affect the size of your mortgage payments. Some of these include:

  • Your home price: This dictates how much you will need to borrow. 
  • Your down payment: The more you are able to pay up front towards the purchase of your home, the smaller your required mortgage amount. In turn, the smaller your monthly mortgage payment will be.
  • Your total mortgage amount: This is the price of your new home, less the down payment, plus mortgage insurance, if applicable.
  • Your interest rate: The lower the interest rate on your mortgage, the lower your monthly payments will be. Ratehub.ca can help you find the best mortgage rates available today to keep your payment as low as possible. When choosing between a variable or fixed mortgage rate, generally speaking, variable rates provide lower mortgage payments as they tend to be lower. According to a landmark 2001 study, historically, over 90% of Canadians who have maintained a variable mortgage rate throughout their entire mortgage term have paid less in interest than those who have stuck to a fixed rate. However, if you seek stability throughout your mortgage term, a fixed rate may be more suitable for you.
  • Your amortization period: Your amortization period is the length of time it takes to pay off your entire mortgage. The longer your amortization period is, the lower your monthly mortgage payments will be. That said, since it will take you a longer time to pay off your mortgage, you will end up paying more in interest.

How do I get approved for a mortgage?

When thinking about your monthly mortgage payments, it’s also important to consider what you’ll need in order to get approved for a mortgage. Here are some of the most important things that prospective lenders will want to see: 

  • A good credit score: You need a credit score of 680 or higher to qualify for the best mortgage rates that allow for the lowest monthly mortgage payments. To qualify for any mortgage at all, you’ll need a credit score of at least 560. Read more on how your credit score affects your ability to get approved for a mortgage.
  • Proof of income: You’ll need to provide proof of income in the form of pay stubs and/or tax documents like your Notice of Assessment (NOA). If you recently started a new job, even with proof of income, many lenders will want to see that you’ve held the position for at least a year. 
  • Ability to pass a mortgage stress test: You will need to pass a mortgage stress test, which ensures that you can still afford your mortgage payments at a rate known as the “qualifying rate”, set by the Office of the Superintendent of Financial Institutions (OSFI), or your contract rate + 2%, whichever is the higher of the two. Following the Bank of Canada's historically large July 13, 2022 rate hike, even with the lowest mortgage rates on the market you will be stress tested at your contract rate + 2%, as this will always be higher than 5.25% (until rates come down again). 
  • Down payment: The size of your down payment affects the house you can afford as well as the size of your mortgage and associated monthly payments. As well, it affects whether you will need to purchase mortgage default insurance, which is required if your down payment is less than 20% of the value of the home you are purchasing. The minimum down payment you’ll need to have depends on the home you’re looking to buy:

Purchase Price

Minimum Down Payment

Less than $500,000

5%

$500,000 - $999,999

5% of the first $500,000 and 10% of any amount over the first $500,000

$1,000,000 or more

20%

 

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How to lower your mortgage payments

There are a few ways to lower your monthly mortgage payments. You can reduce the purchase price, make a bigger down payment, extend the amortization period or find a lower mortgage rate. Use the calculator to see what your payment would be in different scenarios.

Keep in mind that if your down payment is less than 20%, your maximum amortization period is 25 years. As for finding a lower mortgage rate, it’s always a good idea to speak to a mortgage broker for assistance.

How can you pay off your mortgage faster? 

If you are able to pay your mortgage off faster, it can save you thousands of dollars in interest. However, any of the methods required to pay off your mortgage faster will result in larger monthly payments on your part, albeit for a shorter period of time. Be aware that some lenders may include pre-payment penalties with your mortgage, so it’s important to understand the fine print. That said, some of the ways you can pay off your mortgage more quickly include:

  • Accelerate your mortgage payment schedule: Switch to a more frequent payment plan. For example, if you were making payments on a monthly basis, you may want to consider paying on a bi-weekly basis.
  • Increase the amount of your mortgage payments: Any increase in the amount you are paying towards your mortgage on a monthly basis will speed up the time it takes to pay off your mortgage. 
  • Make a lump sum payment: If you receive a lump sum such as a tax refund, inheritance, a bonus, etc., and you can afford it, apply that lump sum towards your mortgage payments. 

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