Canadian Mortgage Calculator

As at May 2026 (Bank of Canada and lender data):

• BoC policy rate: 2.25% (held since October 2025)
• Prime rate: approximately 4.45%
• Best 5-year fixed (insured): approximately 4.04–4.09% p.a.
• Best 5-year variable (insured): approximately 3.30–3.35% p.a.
• Best 3-year fixed: approximately 3.99% p.a.

Fixed rates are driven by Government of Canada bond yields (especially the 5-year bond), while variable rates follow the prime rate. Big-bank posted rates are typically higher than the best broker/direct-lender rates shown here.

Under OSFI Guideline B-20, all federally regulated lenders must qualify borrowers at a stress test rate — the greater of:

• Your contract rate plus 2 percentage points, or
• 5.25% (the minimum qualifying floor)

This applies to both insured (less than 20% down) and uninsured (20%+ down) mortgages. At a 4.09% contract rate, you must qualify at 6.09%. The stress test reduces the maximum mortgage you can qualify for by roughly 20%, ensuring you could still afford payments if rates rose. Per OSFI.

CMHC mortgage loan insurance is required by law for high-ratio mortgages (less than 20% down). It protects the lender if you default — not you. The premium is a percentage of the mortgage and is usually added to your balance:

• 15–19.99% down (80.01–85% LTV): 2.80% premium
• 10–14.99% down (85.01–90% LTV): 3.10% premium
• 5–9.99% down (90.01–95% LTV): 4.00% premium

A 0.20% surcharge applies to 30-year amortizations. Insured mortgages are capped at homes under CAD 1,500,000. In some provinces, provincial sales tax on the premium must be paid in cash at closing. Per CMHC.

The impact compounds significantly over a 25-year amortization. On a CAD 560,000 mortgage:

• At 4.09% p.a.: total interest is approximately CAD 332,000
• At 3.59% (0.50% lower): total interest is approximately CAD 287,000 — a saving of ~CAD 45,200
• At 4.59% (0.50% higher): total interest is approximately CAD 378,000 — an extra cost of ~CAD 46,300

A 0.25% difference changes total interest by roughly CAD 23,000 either way. Canadian mortgages renew every 1–5 years, and at each renewal the rate offered by the existing lender can be compared with rates offered by other lenders.

Beyond the down payment, Canadian buyers should budget for:

• Land transfer tax: varies by province (and municipality — Toronto has an additional municipal tax). First-time buyer rebates may apply.
• Legal / notary fees: CAD 1,500–3,000
• Home inspection: CAD 400–700
• Title insurance: ~CAD 300
• Appraisal: CAD 300–500 (sometimes lender-paid)
• PST on CMHC premium: payable in cash at closing in some provinces

A common rule of thumb is to budget 1.5–4% of the purchase price for closing costs. Always confirm provincial land transfer tax and rebates with your provincial government.

Accelerated bi-weekly payments (26 per year) instead of monthly (12) are calculated as half the monthly payment paid every two weeks — which results in the equivalent of one extra monthly payment each year.

On a CAD 640,000 mortgage at 4.09% p.a. over 25 years, switching to accelerated bi-weekly (CAD 1,698.91 every two weeks) reduces total interest by approximately CAD 54,400 (CAD 324,977 vs CAD 379,348) and pays the mortgage off about 3.2 years sooner (21.8 years). The saving comes from paying down principal faster, not from the frequency itself. Many borrowers align the payment frequency with their pay cycle. Per FCAC.

Prepayment privileges let you pay down your mortgage faster without penalty. Most Canadian closed mortgages allow:

• Lump-sum payments: typically 10–20% of the original balance per year
• Payment increases: raising your regular payment by 10–20% annually

Prepayments apply directly to principal, so they save interest on every future payment. On a CAD 560,000 mortgage at 4.09%, an extra CAD 500/month can save tens of thousands in interest and cut years off the amortization. The earlier you prepay, the bigger the saving — because the balance (and the interest charged) is highest at the start. Prepayment limits for lump sums are set out in each mortgage contract.

Break penalties are charged when you exit or significantly prepay a fixed-rate mortgage before the term ends. For fixed mortgages, lenders charge the greater of:

• Three months' interest, or
• The Interest Rate Differential (IRD) — the difference between your rate and the current rate for the remaining term

IRD penalties are highest when rates have fallen since you locked in — for example, a borrower who fixed at 5.5% and wants to break to refinance at 4.0% faces a large IRD. Variable-rate mortgages typically charge a simpler 3 months' interest penalty. Lenders provide a written penalty quote on request before a mortgage is broken. Per FCAC.

At the end of each term (typically 1–5 years), your mortgage renews at the prevailing rate for a new term, while the amortization continues to count down. Your lender will send a renewal offer before the term ends.

Key points per FCAC:

• You are not obligated to accept your lender's renewal offer — you can negotiate or switch lenders
• Switching lenders at renewal usually avoids break penalties (the term has ended)
• Many borrowers renewing in 2026 from pandemic-era low rates face higher payments
• Some lenders hold a renewal rate for up to 120 days

The renewal rate offered by the existing lender can differ from rates offered by other lenders at the same time.

Canadian first-time buyers can access several federal programs:

• First Home Savings Account (FHSA): contribute up to CAD 8,000/year (CAD 40,000 lifetime) — tax-deductible in, tax-free out, no repayment.
• Home Buyers' Plan (HBP): withdraw up to CAD 60,000 from your RRSP tax-free, repaid over 15 years.
• First-Time Home Buyers' Tax Credit (FTHBTC): up to CAD 1,500 in federal tax savings.
• First-Time Home Buyers' GST Rebate: up to CAD 50,000 back on new builds (Royal Assent 12 March 2026).

Provincial programs (land transfer tax rebates) also exist. Always confirm current limits with the CRA before relying on any program.

The FHSA combines the best features of an RRSP and a TFSA for first-time buyers. Per the CRA:

• Contribution limit: CAD 8,000 per year, CAD 40,000 lifetime
• Tax-deductible: contributions reduce your taxable income (like an RRSP)
• Tax-free withdrawals: qualifying withdrawals for a first home are completely tax-free (like a TFSA) — with no repayment required
• Carry-forward: up to CAD 8,000 of unused room carries forward one year (max CAD 16,000 in a single year)
• Eligibility: Canadian resident 18+, first-time buyer (no owned home in the current or prior 4 calendar years)

For most first-time buyers the FHSA is the single most powerful savings tool, and it can be combined with the HBP.

The Home Buyers' Plan lets first-time buyers withdraw up to CAD 60,000 from their RRSP (CAD 120,000 per couple) tax-free for a down payment. Per the CRA:

• The funds must be repaid to your RRSP over 15 years, beginning the second year after withdrawal
• If you miss a year's repayment, that amount is added to your taxable income
• RRSP funds must have been in the account at least 90 days before withdrawal
• You must be a first-time buyer (or re-entering after a relationship breakdown)

The HBP can be stacked with the FHSA — a single buyer can access up to CAD 100,000 (CAD 40k FHSA + CAD 60k HBP) in tax-advantaged down payment funds.

The minimum down payment depends on the purchase price (per CMHC rules):

• Up to CAD 500,000: 5% minimum
• CAD 500,001–1,499,999: 5% on the first CAD 500,000 + 10% on the remainder
• CAD 1,500,000+: 20% minimum (CMHC insurance not available)

For a CAD 700,000 home, the minimum is CAD 25,000 + CAD 20,000 = CAD 45,000. A down payment below 20% requires CMHC insurance. Reaching 20% down (CAD 140,000 on a CAD 700,000 home) avoids the premium and unlocks the best rates. Investment properties require a minimum 20% down.

Announced and granted Royal Assent on 12 March 2026, the First-Time Home Buyers' GST/HST rebate offers eligible first-time buyers of newly built homes up to CAD 50,000 back on the federal portion of GST/HST.

Key points:

• New builds only: applies to purchasing or building a new home as a primary residence
• First-time buyers: standard first-time-buyer eligibility applies
• Phase-out: the rebate amount tapers on higher-priced homes
• Stacks: can be combined with the FHSA, HBP and FTHBTC

This is separate from the long-standing GST/HST New Housing Rebate. Confirm current eligibility and phase-out thresholds with the CRA before relying on it.

Per the CRA, mortgage interest on money borrowed to earn rental income is fully deductible against that rental income — along with property taxes, insurance, maintenance, and property management fees. If total deductible expenses exceed rental income, the resulting net rental loss may be deductible against your other income.

Important distinction: mortgage interest on your principal residence is NOT deductible in Canada — unlike the United States. Only interest on property held to earn income qualifies. The CRA traces deductibility to the use of the borrowed money, so records separating its income-earning use determine what qualifies.

When you sell an investment property for a profit, the capital gain is taxed at a 50% inclusion rate for individuals — meaning half the gain is added to your income and taxed at your marginal rate.

Important 2025 update: the federal government had proposed raising the inclusion rate to 66.67% on gains above CAD 250,000, but this increase was cancelled on 21 March 2025. All capital gains for individuals continue at the flat 50% inclusion rate. Your principal residence remains fully exempt from capital gains tax. Per the CRA, tax treatment depends on your circumstances — consult a registered tax professional before selling.

Financing a rental property in Canada differs materially from an owner-occupied home:

• Minimum 20% down payment — CMHC insurance is not available for investment properties, so high-ratio (5%-down) financing is not an option
• Higher rates: investment-property mortgages often carry a small rate premium over owner-occupier rates
• Stress test applies: you must still qualify at the greater of your rate + 2% or 5.25%
• Rental income: lenders may use a portion of expected rent to support your application

Interest, property taxes, insurance and maintenance are deductible against rental income (CRA), and capital gains are taxed at the 50% inclusion rate on sale.

For investment properties, the structure of how you hold and access funds affects deductibility. Per the CRA, interest deductibility traces to the use of the borrowed money, not the property itself.

Two considerations:

• Re-advanceable / HELOC structures can let you keep investment borrowing separate from personal borrowing, preserving the deductible character of the mortgage interest
• If you prepay and later re-borrow for personal use, the interest on the re-borrowed portion may become non-deductible

For owner-occupied homes this distinction matters less because the interest is not deductible anyway. Given the complexity, investors should structure financing with a registered tax professional before committing.

How Canadian P&I, semi-annual compounding, and affordability calculations work