Oakwyn Realty Ltd.

Mortgage Calculator

Estimate Your Monthly Mortgage Payments

Calculate your monthly payment including principal, interest, property taxes, and home insurance. Adjust inputs to explore different scenarios for your Canada home purchase.

How Mortgage Payments Are Calculated

A mortgage payment is made up of four components, often called PITI: principal, interest, property taxes, and insurance. The principal and interest portion is calculated using the standard amortization formula, which spreads your loan balance across equal monthly payments over the life of the loan. Each payment is split between reducing the principal balance and paying interest on the remaining balance.

Early in the mortgage term, a larger portion of each payment goes toward interest. As the principal balance decreases over time, more of each payment goes toward principal reduction. This is why even small differences in interest rate can have a significant impact on total interest paid over a 25-year amortization.

Property taxes are assessed annually by your local municipality and are typically between 0.5% and 1.5% of the property value in Canada, though rates vary significantly by province and municipality. Home insurance protects against damage, theft, and liability, and is usually required by your lender. Both are included in this calculator to give you an accurate picture of your true monthly housing cost.

Down payment size directly impacts your monthly payment and total interest. In Canada, down payments below 20% require mortgage default insurance (CMHC), which adds a one-time premium to your loan balance.

Frequently Asked Questions

How is a mortgage payment calculated?
Your monthly mortgage payment is calculated using the standard amortization formula. It takes your loan amount, annual interest rate, and amortization period to determine fixed monthly payments that cover both principal and interest. Each payment reduces your outstanding balance while paying interest on the remaining amount.
What is amortization?
Amortization is the process of spreading your mortgage loan into equal monthly payments over a set period. In Canada, the standard amortization period is 25 years (up to 30 for insured mortgages with 20%+ down). In the US, 30-year fixed-rate mortgages are most common. A longer amortization lowers your monthly payment but increases total interest paid.
How does the interest rate affect my payment?
Even small changes in interest rate have a large impact over the life of a mortgage. For example, on a $500,000 loan over 25 years, a 0.5% rate increase adds roughly $150 per month and over $40,000 in total interest. Locking in a lower rate or making a larger down payment are the two most effective ways to reduce your lifetime cost.
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment. Principal reduces your loan balance, interest is the cost of borrowing, taxes are your annual property tax divided by 12, and insurance covers your home against damage and liability. Lenders use PITI to determine your debt-to-income ratio.
How much should I put as a down payment?
A larger down payment reduces your loan amount, monthly payment, and total interest. In Canada, the minimum is 5% for homes under $500K (10% on the portion above $500K), but putting down less than 20% requires CMHC mortgage insurance. In the US, 20% avoids private mortgage insurance (PMI), though some programs allow as little as 3% down.
What is the difference between fixed and variable rate?
A fixed-rate mortgage locks your interest rate for the entire term, giving you predictable payments. A variable-rate mortgage fluctuates with the prime rate, so your payment (or the interest portion) can go up or down. Fixed rates offer stability; variable rates are often lower initially but carry the risk of rate increases.
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