Mortgage Payment Calculator Canada

September 2025: Mortgage market update

2025 has been a relatively slow year for the Canadian housing market, with buyers hunkered down due to the uncertainty over new U.S. tariff threats. If you’re looking for a mortgage rate in Canada, read on for some key information.

• Real estate update: September 2025 marked another steady chapter for Canada’s housing market. The Canadian Real Estate Association (CREA) reported that national home sales fell 1.7% from August, the first monthly decline since spring, yet remained 5.2% higher than the same month last year — making it the strongest September since 2021. The modest decline in activity was concentrated in larger markets like Vancouver, Calgary, Edmonton, Ottawa, and Montreal, where slower sales outweighed gains in the Greater Toronto Area and Winnipeg. Market conditions stayed balanced nationwide. New listings slipped 0.8% month over month, while the sales-to-new-listings ratio came in at 50.7%, consistent with a balanced market. The total number of homes for sale reached 199,772, up 7.5% year over year and in line with seasonal norms. The months of inventory metric held at 4.4, its lowest level since January and below the long-term average of five months — suggesting that supply remains tight but not constrained. After adjusting to higher borrowing costs earlier in the year, prices have now stabilized across most regions. The MLS® Home Price Index (HPI) dipped 0.1% from August and 3.4% from a year earlier, while the average national sale price increased 0.7% year over year to $676,154. CREA expects annual price comparisons to narrow further through the end of the year, indicating that the market has largely found its footing after a period of correction.

  Read more: Canadian home sales hit a four-year September high

• CPI update: Canada’s inflation rate edged higher in August, with the Consumer Price Index (CPI) rising to 1.9% year-over-year, up from 1.7% in July. The primary factor was a smaller decline in gas prices, which fell 12.7% compared to July’s 16.1% drop. Excluding gasoline, the CPI would have grown by 2.4%, just shy of the 2.5% increase that had persisted for the prior three months. Food prices added further pressure, climbing 3.5% annually, slightly above July’s 3.4%. Shelter inflation, one of the more significant contributors in recent months, showed signs of moderation. Shelter costs grew 2.6% in August, easing from 3% in July. Rent inflation slowed to 4.5% from 5.1%, while mortgage interest costs rose 4.2%, reflecting the impact of falling mortgage rates over the past 18 months. Core measures of inflation showed modest improvements as well, with the CPI Median steady at 3.1% and the CPI Trim easing to 3% from 3.1%.

Canadian housing market forecast for 2025

CREA has updated its housing market forecast, reflecting a slower-than-expected recovery in 2025 but stronger momentum heading into 2026. After an encouraging rebound in late 2024, early 2025 was disrupted by renewed economic instability and tariff-related issues that dampened buyer activity. Since March, however, home sales have climbed steadily, signaling that the pause was temporary. CREA now projects 473,093 residential sales in 2025, down 1.1% from the previous year, with weaker activity in major provinces slightly offset by gains elsewhere. The national average home price is forecast to decline 1.4% to $676,705. By 2026, CREA expects a strong resurgence, with national sales rebounding 7.7% to 509,479 — the highest since 2021 — and the average price rising 3.2% to $698,622, bringing it back near the $700,000 mark. While lingering uncertainty remains, CREA suggests market confidence is improving and the recovery is on a firmer footing heading into next year.

Highlights from the Bank of Canada’s September 17, 2025 announcement

On September 17, 2025, the Bank of Canada lowered its overnight lending rate by 25 basis points to 2.5% – its lowest level in more than three years. This decision ends a period of six months without rate movement.

• The move reflects mounting evidence of economic strain. Canada’s labour market weakened sharply in August, with 66,000 job losses pushing unemployment to 7.1%. GDP also contracted by 1.6% in the second quarter. Inflation remains below the Bank’s 2% target, with core measures showing stability.
• The rate cut reduces Canada’s prime rate to 4.7%, lowering costs for variable-rate mortgages, HELOCs, and other borrowing tied to prime. For homeowners, today’s cut could bring the best five-year variable mortgage rate down from 3.95% to 3.70%, saving an average borrower just over $1,000 annually. 
• Fixed mortgage rates, influenced by bond yields, are also trending downward, with the best five-year fixed insured rate currently at 3.94% as lenders respond to falling government bond yields.
• Savers will see diminished returns on products such as high-interest savings accounts and GICs. However, these products continue to offer comparatively stable yields in uncertain markets.
• The Bank signalled it may cut rates again if weakness persists. The timing could also be influenced by the U.S. Federal Reserve, which has also delivered a 25-basis-point cut

Read more: Bank of Canada cuts target interest rate to 2.5% in September 2025 announcement

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.

Tip for first-time home buyers: GST exemption

Under Prime Minister Mark Carney’s GST exemption proposal, first-time home buyers could save up to $50,000 if they buy a $1-million newly-built home or a substantially renovated property. The Conservative Party has proposed a similar plan, which would apply to homes priced up to $1.3 million and wouldn’t be limited to first-time buyers.

The final form of this policy hinges on the outcome of the Federal Election on April 28, 2025, leaving some details in flux. 

Also read: Federal Liberals and Conservatives vow to remove GST on new home purchases

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. 
• 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:

More mortgage calculators

For further information, check out these helpful pages!

• Best Mortgage Rates in Canada
• Variable or Fixed Mortgage Rates
• Amortization
• Mortgage Default Insurance (CMHC Insurance)
• Open vs. Closed Mortgage: What's the Difference?
• Mortgage Terms Glossary 
• Mortgages