Mortgage Calculator (Canada)

Frequently Asked Questions

• How is my monthly mortgage payment calculated?

  Monthly principal & interest is calculated using the formula M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the total number of months. Our calculator then adds property tax, homeowner's insurance, PMI and any HOA fees to give you the full PITI payment.

• What is PITI?

  PITI stands for Principal, Interest, Taxes and Insurance — the four standard components of a monthly mortgage payment. Lenders use total PITI when assessing affordability, typically targeting a maximum of 28% of your gross monthly income.

• When is PMI required?

  Private Mortgage Insurance (PMI) is typically required by lenders when your down payment is less than 20% of the home price on a conventional loan. PMI typically costs 0.2%–2% of the loan amount per year and can be removed once you reach 20% equity.

• Should I choose a 15-year or 30-year mortgage?

  A 15-year mortgage usually offers a lower interest rate and saves a substantial amount of total interest, but the monthly payment is significantly higher. A 30-year mortgage offers lower monthly payments and more cash-flow flexibility but you pay more interest over the life of the loan.

• How does paying extra each month affect my mortgage?

  Extra principal payments reduce the loan balance faster, which means less interest accrues. Even an extra $100/month on a $300,000 30-year loan can save tens of thousands in interest and shave several years off the term.

• Are mortgage interest payments tax-deductible?

  In the US, mortgage interest is deductible on the first $750,000 of home acquisition debt for primary and secondary residences (post-2017 TCJA rules). You must itemize deductions to claim it. Rules vary by country — consult a tax professional.

• What is the 28/36 rule?

  The 28/36 rule says no more than 28% of your gross income should go to housing (PITI) and no more than 36% to all debt obligations. It's a quick affordability heuristic used by many lenders.

• How does the loan term affect my interest rate?

  Shorter loan terms (15-year) typically come with lower interest rates because the lender's risk is reduced. Longer terms (30-year) carry slightly higher rates but lower monthly payments.

• What is amortization?

  Amortization is the process of paying off a loan with regular payments. Early in the loan, most of each payment goes toward interest; as the principal balance shrinks, more of each payment goes toward principal. The amortization schedule shows this breakdown for every payment.

• Does this calculator account for closing costs?

  No — the calculator focuses on the recurring monthly payment. Closing costs (typically 2%–5% of the home price) are paid upfront and include lender fees, title insurance, escrow and prepaid taxes. Budget for them separately.