How the payment is calculated
Fixed-rate mortgages in Canada compound twice a year, not monthly, so a quoted rate works out slightly lower per payment than the same rate on a US calculator. This page converts your annual rate to the equivalent monthly rate, then spreads the loan over the amortization you pick. Property tax, heating and condo fees are not included; lenders add those when they test whether you qualify.
Minimum down payment in Canada
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% |
| $500,000 to $1,499,999 | 5% of the first $500,000, plus 10% of the rest |
| $1,500,000 and over | 20% |
On an $850,000 home that is $25,000 plus $35,000, or $60,000. Since December 15, 2024 an insured mortgage is available on homes priced under $1.5 million, up from $1 million before.
Mortgage default insurance
With less than 20 per cent down, the lender must insure the mortgage through CMHC, Sagen or Canada Guaranty. The premium is a percentage of the loan and is added to the mortgage, so you pay it off over time. Ontario charges 8 per cent sales tax on the premium, and that part is due in cash on closing day.
| Down payment | Premium on the loan |
|---|---|
| 5% to 9.99% | 4.00% |
| 10% to 14.99% | 3.10% |
| 15% to 19.99% | 2.80% |
| 20% or more | None required |
A 30-year amortization on an insured mortgage is open to first-time buyers and to anyone buying a newly built home, and it adds 0.20 percentage points to the premium. With 20 per cent down or more, most lenders offer 30 years to any buyer.
The stress test
You have to qualify at a higher rate than the one you will pay: the greater of 5.25 per cent or your contract rate plus 2 points. A payment that looks comfortable here can still fail the lender's test, which is why a pre-approval comes before house hunting.
For the cash you need on closing day, run the land transfer tax calculator. The first-time buyer guide covers the FHSA, the Home Buyers' Plan and the rebates.
Sources
- Department of Finance Canada, mortgage insurance rules effective December 15, 2024.
- CMHC, mortgage loan insurance premium schedule.
- Office of the Superintendent of Financial Institutions, minimum qualifying rate.
Estimates for information only. Your lender's figures are the ones that count.