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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: September 4, 2024 Bank of Canada announcement

Breaking news: 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

Highlights from the Bank of Canada’s September 4, 2024 announcement

On September 4, 2024, the Bank of Canada lowered its trend-setting overnight rate by -0.25%, taking it from 4.5% to 4.25%. This marks the third consecutive month in which the central bank has lowered the policy rate, after not having implemented any rate cuts since March 2020. 

  • The central bank’s decision to cut rates was based largely on declining inflation, with July’s CPI having come in aligned with expectations at 2.5%, and inflation falling in the United States and around the world as well. 
  • Canadians with variable-rate mortgages and home equity lines of credit (HELOC) can take comfort knowing that their rates and payments are continuing to go down. 
  • Although fixed-rate mortgages are tied to the bond market and are therefore not directly affected by the Bank’s rate cut, as it was widely anticipated, some lenders had already begun lowering their fixed mortgage rates as we led up to the announcement. Now that the rate cut is official, more lenders are certain to follow suit. 
  • It will be interesting to see to what extent this announcement affects the housing market. There is anticipation that this third rate cut will bring buyers back to the market now that we have received a cumulative 75-basis-point reduction.

September 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 have descended to the 2.7% range 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 September 16, 2024, the Canadian Real Estate Association (CREA) published the numbers for the Canadian housing market for the month of August 2024. The latest figures indicate that the market was relatively slow in August, as buyers continue to hold out for lower rates. A grand total of 39,573 residential properties were sold across the country in August, a slight increase of 1.3% from July, but down on an annual basis by -2.1%. The number of new listings, meanwhile, rose by 18.8% from the same period last year. The national sales-to-new-listings ratio (SNLR) came in at 53% in August (holding steady from 52.7% in July), indicating that the market remains firmly in balanced market territory. The SNLR is used by CREA to gauge competition in the marketplace, and is considered balanced with a ratio of 45 - 65%. Above and below that range reflect sellers’ and buyers’ markets, respectively. Abundant supply coupled with soft demand was enough to cause the average home price to drop. In August 2024, the national average home price in Canada came in at $649,100, virtually unchanged (0.1%) from August 2023 and below the previous month’s national average home price of $663,317.

    Read more: Canadian real estate remained in “holding pattern” in August 

 

  • CPI Update: On September 17, 2024, Statistics Canada released the August Consumer Price Index (CPI) report, revealing that the headline measure fell to 2%, down from 2.5% in July and slightly under the forecasted 2.1%. This is considered a sustainable level for inflation that neither stimulates nor restricts the economy, and is what the Bank of Canada has been targeting ever since post-pandemic demand and lingering supply chain issues drove inflation to a peak of 8.1% in June 2022. The “core” measures that are tracked closely by the Bank of Canada also came in at a 40-month low. The CPI Trim, which filters out extreme price movements that can be caused by specific items in the basket of goods, dropped for the fourth consecutive month, down to 2.4% from July’s 2.7%. Mortgage interest costs have fallen to 18.8% as a result of the Bank of Canada’s earlier two rate cuts in June and July, down from a peak of 30.9% in August 2023, and thus overall shelter inflation fell to 5.3% from the previous 5.7% (despite rents remaining elevated at 8.9%).

    Also read: Canadian CPI lowers to 2% in August

 

  • US CPI Update: On August 14, the U.S. Bureau of Labor Statistics reported that the American Consumer Price Index (CPI) slowed to a growth rate of 2.9% in July, down from 3% in June. This is the lowest the inflation measure has been since March 2021, and supports other indicators that the American economy is steadily slowing, paving the way for a rate cut from the US Federal Reserve in September. This would mark the first downward movement for the American central bank since 2020, and end the rate hold that has been in place since July 2023. Currently, the Federal Funds Rate sits at 5.3%, a 23-year high.

That American CPI is trending lower is also good news for the Canadian economy, as the two countries’ economies are closely interlinked due to trade. The Bank of Canada is already poised to implement another quarter-point cut (its third since June) in September, but the fact that the US Fed is also gearing up to cuts rates supports a “lower for longer, faster” stance. Borrowers can expect lower variable and fixed mortgage rates in the months to come, as a result.

Read more: US inflation slows to 2.9% in July

2024 Housing market forecast

CREA has revised its projections for 2024 and 2025, taking into account the fact that the Bank of Canada is now expected to implement fewer rate cuts than previously anticipated, as well as the rapid increase in supply and relatively weak demand.

The organization now projects that some 472,395 homes will change hands over the course of 2024, representing a 6.1% annual increase. This is down from an earlier projection of 492,083 home sales, which would have represented a 10.5% increase.

In 2025, CREA is predicting that home sales will rise to 501,902 transactions, representing a 6.2% annual increase, spurred by lower interest rates and rising demand. This has been revised downward from an initial forecast of 540,494 sales, which would have represented a 7.8% increase.

The national average home price in Canada is predicted to increase by 2.5% in total in 2024 for a figure of $694,393, and rise by a further 5% in 2025 to reach $729,319. CREA had previously predicted growth of 4.9% in 2024 to reach $710,120, followed by 7% growth in 2025 to reach an average home price of $760,120.

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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