Mortgage payment in 2026: how it works, with a worked example

Questions people ask

Why is my Canadian mortgage payment lower than an American calculator shows?

Canadian fixed-rate mortgages compound semi-annually by law (Interest Act, section 6), while US mortgages compound monthly. At 5% the effective monthly rate is 0.4124% in Canada versus 0.4167% in the US. On a $500,000 mortgage over 25 years that is $2,908 a month here versus $2,923 there.

How much does CMHC mortgage insurance cost in 2026?

The premium depends on your loan-to-value ratio: 2.40% of the loan with 15% to 20% down, 3.10% with 10% to 15% down, and 4.00% with 5% to 10% down. Choosing a 30-year amortization adds 0.20%. The premium is added to your mortgage, but the provincial sales tax on it (8% in Ontario, 9% in Quebec, 6% in Saskatchewan) must be paid in cash at closing.

What is the minimum down payment in Canada?

5% of the first $500,000 of the price and 10% of the portion above that, up to the $1,499,999 insured limit. At $1.5 million and above the home cannot be insured, so 20% down is required. With less than 20% down at any price, mortgage default insurance is mandatory.

Can I get a 30-year amortization?

With a down payment under 20%, 30 years is allowed only if at least one buyer is a first-time home buyer or the home is newly built; otherwise the maximum is 25 years. With 20% or more down, lenders can offer 30 years to anyone, and some go longer. A longer amortization lowers the payment but increases total interest substantially.

What is the difference between bi-weekly and accelerated bi-weekly payments?

A regular bi-weekly payment is the monthly amount times 12 divided by 26, so you pay the same total each year. An accelerated bi-weekly payment is simply half the monthly payment, paid 26 times, which equals 13 monthly payments a year. That extra month goes straight to principal and typically shortens a 25-year mortgage by about three years.

What rate do I need to qualify at under the stress test?

Lenders must qualify you at the greater of your contract rate plus 2 percentage points and 5.25%. At a 4.5% contract rate you must show you could afford payments at 6.5%. The rule applies to insured and uninsured mortgages, although since November 2024 uninsured borrowers switching lenders at renewal without changing their loan are exempt.

Does the payment include property tax and home insurance?

No. The payment shown is principal and interest only. Lenders usually add a monthly property-tax instalment to the payment, and you pay home insurance separately. Add both when checking what you can afford, and remember condo fees if they apply.

How do variable-rate mortgages compound?

There is no statutory rule. Most lenders compound variable rates semi-annually like fixed rates, but some compound monthly. The calculator assumes semi-annual compounding for all rates; if your lender compounds monthly, your payment will be slightly higher.

What does a mortgage really cost per month beyond the payment?

Add property tax (roughly 0.5% to 1.2% of the price a year depending on the city), heat and utilities, home insurance and any condo fees. On a $600,000 home that is often $600 to $900 a month on top of principal and interest, which is why lenders test your budget with those costs included.

How much cash do I need on closing day?

Your down payment plus closing costs: land transfer tax (rebated in part for first-time buyers in Ontario, BC, PEI and Quebec), the provincial sales tax on the CMHC premium if you have one, legal fees and disbursements, title insurance, and adjustments for prepaid property tax or utilities. Budget 1.5% to 4% of the price beyond the down payment; the calculator itemizes it.

Fixed or variable in 2026?

A variable rate is usually lower today but moves with the Bank of Canada's policy rate. The calculator shows the average variable rate over your term at which the two cost the same; if you expect rates to stay below that, variable wins. Variable-rate penalties are also smaller (three months' interest) if you break the mortgage.

What happens at the end of my 5-year term?

The balance shown at the end of the term is what you renew, at whatever rates are then. Only the interest and principal of the first term are certain; the mortgage renewal calculator shows what a rate change does to your payment at that point.