Why is the Canadian mortgage calculation different from the US?

Canadian fixed-rate mortgages use semi-annual compounding by law, not monthly like US mortgages. The effective monthly rate is calculated as i = (1 + j/2)^(1/6) − 1, where j is the annual nominal rate. This produces a slightly lower effective rate than monthly compounding for the same stated rate.

What is CMHC mortgage insurance and when is it required?

CMHC mortgage loan insurance is required when you put less than 20% down on a home priced under $1,500,000. The premium ranges from 0.60% to 4.00% of the loan amount depending on your loan-to-value ratio, and is added to your mortgage. You also pay PST on the premium in cash at closing if you're in Ontario (8%), Quebec (9%), or Saskatchewan (6%).

What is the mortgage stress test in Canada?

OSFI's mortgage stress test (Guideline B-20) requires federally regulated lenders to qualify borrowers at the greater of the contract rate plus 2% or 5.25% — whichever is higher. This ensures you can still afford payments if rates rise. The qualifying rate is reaffirmed annually; the floor of 5.25% is in effect as of January 2026.

Who qualifies for a 30-year insured amortization?

Since December 15, 2024, first-time buyers and buyers of newly built homes can get an insured mortgage with a 30-year amortization (up from 25 years). A +0.20% surcharge is added to the CMHC premium for 30-year amortization. Buyers with 20% or more down have always been able to choose 30-year amortization.

Canadian Mortgage Payment Calculator

Estimates your monthly payment using correct Canadian semi-annual compounding. Includes CMHC insurance, 30-year amortization eligibility, PST on premium, and your OSFI stress-test qualifying rate.

Home Price

Down Payment

Annual Interest Rate

Fixed rate — uses Canadian semi-annual compounding.

Amortization Period

Province (for PST on CMHC premium)

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Data last verified: 2026. Estimate only — not a mortgage offer. Confirm with a licensed mortgage professional.

Sources:

How Canadian mortgages are calculated

Unlike US mortgages (monthly compounding), Canadian fixed-rate mortgages compound semi-annually by law. The effective monthly rate is:

i = (1 + j ÷ 2)^1/6 − 1

where j is your annual nominal rate. This means a 5% Canadian rate is actually slightly cheaper than a 5% US rate.

CMHC Insurance

Required when down payment is under 20% and purchase price is under $1,500,000. Premium is added to your mortgage.

LTV	Premium
≤ 65%	0.60%
65.01–75%	1.70%
75.01–80%	2.40%
80.01–85%	2.80%
85.01–90%	3.10%
90.01–95%	4.00%

+0.20% surcharge for 30-yr amortization.

Minimum Down Payment

• Price ≤ $500,000 → 5%
• $500k–$1,499,999 → 5% of first $500k + 10% of the rest
• ≥ $1,500,000 → 20% (no CMHC available)

Stress Test (OSFI B-20)

Since 2018, all federally regulated lenders must qualify you at max(rate + 2%, 5.25%). Reaffirmed by OSFI January 2026. Credit unions may differ.

Last updated: 2026. Estimate only — not a mortgage offer. Rules and rates change; always confirm with a licensed mortgage broker or lender.

About Canadian Mortgage Calculations

Semi-Annual Compounding

The Interest Act (R.S.C. 1985, c. I-15) requires that Canadian fixed-rate mortgages disclose rates as semi-annually compounded. This differs from US mortgages, which compound monthly. For the same stated rate, Canadian mortgages result in a slightly lower effective annual cost.

CMHC Mortgage Insurance

Canada Mortgage and Housing Corporation (CMHC) insures high-ratio mortgages (under 20% down) on homes under $1.5M. The one-time premium is added to your mortgage balance, but the provincial sales tax on that premium must be paid in cash at closing — it cannot be rolled in. Ontario charges 8% PST, Quebec 9% QST, and Saskatchewan 6% PST.

30-Year Amortization (2024 Rule Change)

Effective December 15, 2024, the federal government extended 30-year insured amortization to first-time buyers purchasing any property, and to all buyers purchasing a newly built home. Previously, insured mortgages were capped at 25 years. A +0.20% CMHC premium surcharge applies. Buyers with 20%+ down were never restricted to 25 years.

The Mortgage Stress Test

OSFI Guideline B-20 requires federally regulated lenders to qualify borrowers using the greater of the contract rate plus 2% or 5.25%. This floor was maintained through the 2022–2024 rate cycle. Credit unions and private lenders may not be federally regulated and may apply different rules. As of January 2026, OSFI reaffirmed the stress test remains in effect.