How to Calculate Your Mortgage Payment

When determining how much home you can afford, one of the most important things to consider is how much your mortgage will cost you each month. Luckily, there’s a quick and easy way to calculate this – and we’ll show you how to calculate your mortgage payment using a Canadian mortgage calculator.

First, we’ll need to establish some parameters. For our purposes, let’s assume want to buy a home that costs $472,000. Seems precise, right? So, why this figure? Well, it was the average cost of a home in Canada in December 2019, according to the Canadian Real Estate Association (CREA).

How much your mortgage payments will cost will depend on the size of the mortgage you take out. And that will depend on the amount of money you put up-front in the form of your down payment.

How much mortgage down payment do you need?

In Canada, it’s typical for a buyer to put down 5-20% (you can put down more, but not less than 5% with a conventional mortgage lender). 

So, for our example $472,000 home, you could put down 5% (23,600), 10% ($47,200), 15% ($70,800), or 20% ($94,000). Of course, you could put down any percentage from 5-20% (or even more), but writing those figures out would take all day. And you’ve got some mortgage calculations to do. 

And the best way to do that is to use a mortgage payment calculator. 

First, let’s go with the example using 5% down. 

How to calculate your mortgage payment with a 5% down

As mentioned, for a $472,000 home, a 5% down payment would be $23,600. For our purposes, let’s assume the mortgage will be amortized over 25 years, that you choose a five-year fixed mortgage rate of 2.54% (the current best 5-year fixed rate available), and that you want to pay your mortgage in monthly instalments.

(That’s a lot of assumptions. Don’t worry, though, using a mortgage calculator is super easy and can be modified on the fly within seconds. If you wanted to focus on amortization alone, you can use our amortization calculator to generate sample amortization schedules to see what your payments might be like under different amortization length scenarios.)

But, back to our example. After inputting all the details into the mortgage calculator, you’ll see that your total monthly mortgage payment will be $2,098.

Keep in mind, though, that because a 5% down payment was chosen, the total mortgage cost (which, in this case, would be $466,336) includes mortgage default insurance. Mortgage default insurance, in this example, is an extra $17,936 over the 25 year amortization, paid out in monthly instalments, built into your monthly mortgage payment.

You need mortgage default insurance if you want to purchase with less than 20% down.