Canadian mortgage payment, calculated the Canadian way.

How Canadian mortgage compounding actually works

Under Section 6 of the Interest Act, a Canadian residential mortgage's stated rate must be expressed with either annual or semi-annual compounding, not in advance. In practice, every major lender uses semi-annual, not in advance. The effective rate per payment is therefore:

i_period = (1 + annualRate / 2) ^ (2 / paymentsPerYear) - 1

For a 4.79% rate with monthly payments, that gives a periodic rate of ≈0.39488% — not the 0.39917% you'd get from a naive annualRate ÷ 12. Small difference per payment, real money over 25 years.

Source: Interest Act (R.S.C., 1985, c. I-15), s. 6.

Frequently asked questions

Why is this different from a US mortgage calculator?

US mortgages are compounded monthly. Canadian mortgages are compounded semi-annually, not in advance, under the Interest Act. That formula difference means a US calculator will overstate your monthly payment slightly for the same nominal rate.

What's the minimum down payment in Canada?

5% on the first $500,000, 10% on the portion from $500,000 to $1,000,000, and 20% on homes $1,000,000 or more. Less than 20% requires default (CMHC or private) mortgage insurance.

What is accelerated bi-weekly and why do people choose it?

Accelerated bi-weekly takes your monthly payment, divides it by two, and pays that every two weeks — 26 payments of (monthly ÷ 2) instead of 12 monthly. That's the equivalent of one extra monthly payment per year, shaving years off your amortization.

Does this include property taxes, heat, or CMHC insurance?

No. This calculator shows only principal + interest on the mortgage amount you entered. Your total housing cost will also include property taxes, home insurance, utilities, and — if you put less than 20% down — CMHC premiums added to your mortgage principal.