| Year | Paid toward principal | Interest paid | Balance |
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How Canadian mortgages differ
Semi-annual compounding: Canadian mortgages compound twice a year by law, unlike US mortgages (monthly). The effective monthly rate is (1 + r/2)^(1/6) − 1 — slightly less than dividing by 12. This makes Canadian mortgages fractionally cheaper than nominally identical US mortgages.
CMHC / mortgage default insurance: If your down payment is less than 20%, you need insurance (from CMHC, Sagen, or Canada Guaranty). The premium is added to your loan — you pay interest on it over the full amortization. 2025 CMHC rates: 4.00% of loan at 95% LTV, 3.10% at 90%, 2.40% at 85%, 1.70% at 80.01–80%, down to 0.60% at 75% LTV. At 20% down or more (80% LTV), no insurance is required.
Minimum down payment: 5% on the first $500,000 of home price, 10% on the portion between $500,000 and $1.5M, and 20% on anything above $1.5M. Homes over $1.5M can't be insured.
Amortization vs term: Amortization is how long to pay off the full mortgage (up to 25 years insured, 30 uninsured). Term is how long your current rate is locked in (usually 1–5 years). At renewal, you re-negotiate. Use this calculator to see how changing rates could affect your payments.
How much down payment do I need in Canada?
5% on the first $500,000, 10% on the portion from $500K to $1.5M, 20% above $1.5M. A $700,000 home needs: 5% of $500K + 10% of $200K = $45,000 minimum.
How is CMHC insurance calculated?
CMHC charges a one-time premium based on your loan-to-value ratio: 4.00% at 95% LTV, 3.10% at 90%, 2.40% at 85%, 1.70% at 80.01%, 0.60% at 75%. The premium is added to your loan, so you pay interest on it over the full amortization.
Why are Canadian mortgage rates shown as annual but compounded semi-annually?
It's Canadian law (Interest Act). An advertised rate of 5% actually has an effective annual rate of 5.0625% once compounding is factored in, but the monthly rate used in payment calculations is (1 + 0.025)^(1/6) − 1 ≈ 0.4124% rather than a simple 5%/12 = 0.4167%.
Should I pay biweekly or monthly?
"Accelerated biweekly" payments = monthly payment ÷ 2, paid 26 times/year. That's effectively 13 monthly payments per year, shaving years off your amortization. Regular biweekly (monthly × 12 ÷ 26) doesn't save time.