This piece was originally published on January 16, 2017, and was updated on October 18, 2022.
Calgary, Alberta's most populous city, saw an 11.5% year-over-year increase, but still remains well below the national average. According to the Canadian Real Estate Association (CREA), the average home price in Calgary in September 2022 was $516,400, as compared to a national average home price of $640,479.
With average homes in Calgary priced comfortably below the national average, you may wonder what your monthly mortgage payment would be if you purchase a home in Calgary.
In order to calculate the average mortgage payment, a few additional details are required (including the down payment, mortgage rate, amortization period, and payment frequency).
Since the average price of a home in Calgary is above $500,000, the minimum down payment required can be calculated as follows:
- If the home price is above $500,000, the minimum down payment is 10% of the portion of the home’s price above $500,000, plus 5% of $500,000 (which is $25,000). The formula is as follows: $500,000 x 5% + (home price – $500,000 x 10%).
- If the home price is $1,000,000 or more, the minimum down payment is 20% of the home price. The formula is as follows: minimum down payment = house price x 20%
Getting back to the average home in Calgary, the minimum down payment of 10% of $16,400 + 5% of $500,000 would be $26,583. Because the down payment is below 20%, $19,582 in mortgage insurance will be required. For a home with a selling price of $516,400, a down payment of 20% would be $103,280.
Assuming we make the minimum down payment, the total mortgage required to purchase the average Calgary home would be $509,129. This value is calculated by subtracting our down payment from the asking price of the home and adding on the required mortgage insurance.
Aside from searching for your home, searching for the best mortgage rate is one of the most important tasks you can do. Your mortgage rate determines how much interest you’ll pay on your mortgage. Securing the lowest rate will ensure you pay the least amount of interest on your mortgage. Having a low mortgage rate can save thousands of dollars over the life of your mortgage.
There are two common types of mortgages. With a fixed-rate mortgage, your mortgage payments will always be the same amount as your mortgage rate stays constant throughout the term. However, with a variable-rate mortgage, your mortgage payments will vary as your rate will fluctuate with the prime rate. This is because variable rates are dependent on the prime rate. When the prime rate increases or decreases so will your variable rate, which will affect how large your mortgage payment is.
In addition to deciding between a fixed and a variable mortgage, you’ll also have to select the term. The term can span multiple years with the most common being five years. To calculate the average mortgage payment in Calgary, we’ll use the best 5-year fixed rate currently on the market (4.89%) as of October 18, 2022.
When selecting your mortgage, you’ll also be required to pick an amortization period, which determines how long you’ll take to pay off your mortgage. A shorter amortization period means more of your payments will go toward paying down the principal of your mortgage. If you opt for a longer amortization period, your mortgage payments will decrease, but a larger portion will go to paying off interest—not the principal—on your mortgage.
When deciding on an amortization period, you need to be honest about your ability to meet your mortgage payments and whether you can handle larger payments if your rate rises. Amortization periods typically range between five and 30 years, with the most popular term for new mortgages being 25 years. This will be the period used for our calculation. Use our amortization calculator if you want to get a sense of what your monthly mortgage payments would be under different amortization length scenarios.
The payment frequency is how often you make your mortgage payment. The typical frequencies are monthly, bi-weekly, and accelerated bi-weekly. To calculate the average mortgage payment in Calgary, we’ll use a monthly payment.
For this example, the minimum down payment on a $516,400 home is $26,853, the 5-year fixed mortgage rate is 4.89%, there’s a 25-year amortization period and mortgage payments will be monthly. Now we can use a mortgage payment calculator to determine the mortgage payment. The average monthly mortgage payment for a $516,400 home in Calgary is $2,929. For the average home in Canada, the comparable monthly mortgage payment is $3,599 and requires a minimum down payment of $39,070.
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