Mortgage payment calculator – MoneySense

For the majority of Canadians, buying a home will be the single biggest purchase they ever make, and getting a mortgage is an essential part of this process. But how do you ensure you get a mortgage that you can actually afford over the long term? That’s where a mortgage payment calculator comes in.

Why use a mortgage payment calculator?

Just how much a home mortgage will end up costing you over the long haul can be hard to fully grasp, especially when you factor in interest. A mortgage payment calculator is an indispensable tool that will help you understand what your payments will be over time. It also gives you a more accurate sense of what you can afford. 

By using a mortgage calculator to estimate your payments, you’ll have a more realistic picture of the options available to you—and you’ll be better placed to assess mortgage products. In short, a mortgage payment calculator can help you see how a mortgage fits within your current financial plans, as well as how it may affect your future goals.

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How are mortgage payments calculated?

By plugging a few key numbers into a mortgage payment calculator, you’ll get a reliable estimate of your regular payment amount. Here are the most important variables that determine your mortgage payments:

  • Down payment amount: The size of your down payment and the purchase price of your home will determine the amount of money you need to borrow for your mortgage. (Note: You’ll need to have the minimum down payment required in Canada, which is tied to the value of the home.) Your mortgage amount is calculated by subtracting the down payment from the purchase price. If your down payment represents less than 20% of the purchase price, you will have to add the cost of mortgage default insurance. Our calculator does this for you—simply enter the purchase price of the home and the size of your down payment. 
  • Amortization period: The number of years it will take you to repay the mortgage in full. The amortization should not be confused with the mortgage term, which is the period of time your mortgage contract is in effect. Buyers typically complete several terms before paying off the loan. Borrowers with less than a 20% down payment must have mortgages amortized over 25 years or less. Those with more than 20% also have access to 30-year mortgages. 
  • Interest rate: The rate of interest you’ll pay on any outstanding mortgage balance. Your rate will depend on trends in the economy and the terms of your mortgage, such as whether you decide to go with a fixed or variable rate, among other factors.
  • Payment frequency: The interval at which you make your mortgage payments. The calculator above allows you to select monthly, bi-weekly or accelerated bi-weekly payments; however, borrowers can sometimes also pick from semi-monthly, weekly and accelerated weekly payment options. The frequency of your payments will influence how many payments you make per year and the size of each payment. It also impacts how much interest you will pay over the life of the loan. The more frequent your payments, the faster you’ll pay down the debt.

To calculate your mortgage payments, enter these details into the mortgage payment calculator. (The calculator will automatically display the best rates available in your region, but you can also enter your own rate.) The calculator then shows monthly payments across four different scenarios, based on the information you provided. You can alter any of the variables to view how your regular mortgage payment would be affected. 

If your down payment represents less than 20% of the purchase price, the cost of mortgage default insurance is automatically calculated and incorporated into your regular mortgage payment. 

How to manually calculate your mortgage payments

When you need to quickly calculate what your mortgage payment will be, you should probably use a mortgage payment calculator. However, if you prefer to write things out, or if you simply want to understand the math behind your mortgage payments, you can use the formula below: 

Monthly payment = P x (I x (1 + I)^N ) / ((1 + I)^N – 1)

P = Mortgage principal
I = Monthly interest rate
N = Number of payment periods


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