Quick answer: A 600,000 CAD home with 10% down needs 540,000 plus a 3.10% CMHC premium (16,740), so 556,740; at 5% over 25 years the monthly payment is 3,238.03, and accelerated bi-weekly payments of 1,619.01 clear it in about 21 years 6 months.
How it's calculated
Canada's Interest Act (section 6) requires blended-payment mortgages to state the rate compounded yearly or half-yearly, and fixed rates are quoted half-yearly. The rate per payment is i = (1 + j/2)^(2/k) − 1 for k payments a year, and the payment is P·i ÷ (1 − (1 + i)^−n).
The minimum down payment is 5% of the first 500,000 and 10% of the part between 500,000 and 1.5 million; homes of 1.5 million or more need 20%. Under 20% down the mortgage must be insured: the CMHC premium is 4.00% of the loan for 5–9.99% down, 3.10% for 10–14.99% and 2.80% for 15–19.99%, plus 0.20% if the amortization is longer than 25 years, and it is added to the mortgage.
Accelerated bi-weekly payments are half the monthly payment every two weeks: 26 half-payments make 13 monthly payments a year, so the loan is paid off years sooner. For home finance in the Gulf, use the mortgage calculator.
Worked examples
- 600,000, 10% down, 5%, 25 years, monthly: 556,740 × i ÷ (1 − (1 + i)^−300), i = 1.025^(1/6) − 1 → 3,238.03
- Bi-weekly: i = 1.025^(2/26) − 1, n = 650 → 1,492.82
- Accelerated bi-weekly: 3,238.03 ÷ 2 = 1,619.01, paid off in about 558 payments (21 yr 6 mo)
CMHC premium by down payment
| Down payment | Premium (% of loan) |
|---|---|
| 5% – 9.99% | 4.00% |
| 10% – 14.99% | 3.10% |
| 15% – 19.99% | 2.80% |
| 20% or more | Not required |
Frequently asked questions
Why is the Canadian payment lower than a US one at the same rate?
Because the rate compounds twice a year rather than monthly, the effective rate is slightly lower: 5% gives an effective 5.0625% a year instead of 5.116%.
What is the longest amortization in Canada?
Insured mortgages are limited to 25 years, or 30 years for first-time buyers and buyers of new builds (with a 0.20% premium surcharge); uninsured mortgages (20% or more down) can usually go to 30 years.
Do variable-rate mortgages compound the same way?
Many variable-rate mortgages compound monthly. Check your mortgage agreement for the compounding period.
Do I need mortgage insurance?
Yes, if your down payment is under 20%. The premium is added to the loan, and the calculator includes it automatically.
Why do accelerated bi-weekly payments finish sooner?
Each one is half a monthly payment, and 26 a year add up to the same as 13 monthly payments, so you pay one extra month every year.
What is the difference between term and amortization?
Amortization is the time to clear the whole loan, often 25 years. The term is how long your current rate lasts, often 5 years, and then you renew.