Need Help Understanding Mortgages? Here’s How They Work:

Down Payment
A down payment is your initial payment toward the purchase price of your home. In Canada, the minimum down payment is determined by the home’s value:

5% on the first $500,000*
10% on the portion between $500,000 and $999,999
20% on any amount over $1 million

*First Time Home Buyers are eligible for a 5% down payment up to $1,500,000

A larger down payment reduces your mortgage loan amount and can help you qualify for a better interest rate or avoid mortgage default insurance (CMHC fees)

Loan Term
The loan term is the length of time you have to repay your mortgage. Common terms in Canada are 25-year, 30-year, and shorter terms like 15 or 20 years. Most mortgages are amortized over 25 years, but you can choose a shorter term to pay less interest overall.

Loan Type
In Canada, the most common mortgage types are:

Fixed-Rate Mortgage: Your interest rate stays the same for the entire term, offering predictable monthly payments.
Variable-Rate Mortgage: Your interest rate can change with the Bank of Canada’s prime rate, potentially saving you money if rates drop, but your payment could increase if rates rise.

Interest Rate
The calculator uses a current average mortgage rate as a starting point. Your actual rate will depend on your credit score, down payment, and lender. In Canada, rates are typically set based on the Bank of Canada’s policy rate and lender offers.

Property Tax Rate
Property taxes in Canada are set by your municipality and are based on your home’s assessed value. The calculator includes an estimate, but you can adjust this to match your local tax rate for more accurate results.

Home Insurance
Lenders require you to have home insurance (also called property insurance) in Canada. The cost is included in your monthly payment estimate. You can update this amount in the calculator’s advanced options.

Strata Fees

In Canada, condominiums and townhomes have monthly maintenance or strata fees. These cover shared expenses like landscaping, building maintenance, and amenities. If you’re buying a condo or townhome, include these fees in your calculations for a true picture of your monthly costs.