How your mortgage payment is worked out in Canada
Quick summary
Each mortgage payment covers principal and interest. It may also include mortgage insurance, if you bought it, and property taxes, if you pay them through your lender. Three things set the size of the payment: the amount you borrow, the interest rate, and the amortization, which is how long you take to pay it all off. Next step: use the free mortgage payment calculator.
Checked November 11, 2026. Main source: Financial Consumer Agency of Canada: Choosing a mortgage that is right for you (modified October 15, 2025, read November 11, 2026). See all 1 source.
Key facts
- Payment includes
- Principal, interest, optional mortgage insurance, and property taxes if paid through the lender
- Source: FCAC, modified October 15, 2025
- Longest amortization, under 20% down
- 30 years for first-time buyers and new builds, 25 years otherwise
- Source: FCAC, modified October 15, 2025
- Term
- A few months to 5 years or longer
- Source: FCAC, modified October 15, 2025
What is in a payment
The FCAC says the rate you are offered can depend on the term length, the rate type, your lender's posted rate, your credit history, whether you are self-employed, discounts and the type of lender.
- Principal: the part that pays down what you borrowed.
- Interest: the cost of borrowing. A higher rate means more interest.
- Mortgage insurance, if you bought it.
- Property taxes, if you pay them through your lender.
Source: Financial Consumer Agency of Canada: Choosing a mortgage that is right for you (modified October 15, 2025, read November 11, 2026).
Term and amortization are not the same
The term is the length of your contract, from a few months to 5 years or longer. At the end you renew. The amortization is the total time to pay the mortgage off. The FCAC says a longer amortization lowers your payment but raises your total interest.
If your down payment is under 20%, the longest amortization is 30 years for first-time buyers and new builds, and 25 years for everyone else. With 20% or more down, your lender sets the longest amortization.
Source: Financial Consumer Agency of Canada: Choosing a mortgage that is right for you (modified October 15, 2025, read November 11, 2026).
Fixed, variable and hybrid
| Type | What the FCAC says |
|---|---|
| Fixed | The rate stays the same for the whole term and payments are usually the same. It is typically higher than a comparable variable rate |
| Variable | The rate can rise or fall during the term. It is typically lower than a comparable fixed rate. Payments may stay fixed or change with the rate |
| Hybrid | Part of the mortgage is fixed and part is variable |
Source: Financial Consumer Agency of Canada: Choosing a mortgage that is right for you (modified October 15, 2025, read November 11, 2026).
A worked example (our own arithmetic)
Say you borrow $400,000 at 5% over 25 years, paying monthly. We used the standard loan formula with the rate compounded monthly, which keeps the example simple. The payment comes to about $2,338 a month, and over 25 years you would pay about $301,500 in interest. Your lender may compound differently, so your contract's number may be a little different. This example is ours, not an official figure.
Try your own numbers in the free calculator. It takes no email.
Payment frequency changes the payment
The FCAC lists how each frequency is set from the monthly payment. Accelerated payments add the equivalent of one extra monthly payment a year.
Questions people ask
How is a mortgage payment calculated in Canada?
It depends on the amount you borrow, the interest rate and the amortization. The FCAC says each payment covers principal and interest, and may also include mortgage insurance and property taxes.
What is the difference between term and amortization?
The term is your contract length, a few months to 5 years or longer. The amortization is the total time to pay off the mortgage. A longer amortization lowers the payment and raises total interest, per the FCAC.
What is the longest amortization in Canada?
If your down payment is under 20%, the FCAC says 30 years for first-time buyers and new builds and 25 years otherwise. With 20% or more, your lender sets it.
What is the payment on a $400,000 mortgage?
Our own example: about $2,338 a month at 5% over 25 years, with the rate compounded monthly. Your lender's number may differ slightly. Use the free calculator for yours.
Does the payment include property tax?
Only if you pay your property taxes through your lender, per the FCAC. Otherwise you pay them separately.