How to use the mortgage calculator
- Enter the home price and your down payment. The loan amount is the difference.
- Enter the yearly interest rate and the term in years (30 and 15 are common in the US; 25 is the usual amortization in the UK and Canada).
- Add yearly property tax and insurance if you want the full monthly housing cost (often called PITI in the US).
- Choose semi-annual compounding for a Canadian fixed-rate mortgage. Leave it on monthly for the US and UK.
The mortgage payment formula
Lenders in all four markets use the standard amortization formula:
M = P × i ÷ (1 − (1 + i)−n)
Here M is the monthly payment, P the loan amount, n the number of monthly payments and i the monthly interest rate. For a US or UK mortgage, i is the yearly rate ÷ 12. For a Canadian fixed-rate mortgage, Canada's Interest Act requires the rate to be compounded semi-annually, so i = (1 + rate ÷ 2)1/6 − 1.
Worked example: a $400,000 home with $80,000 down (20%) leaves a $320,000 loan. At 6.5% over 30 years with monthly compounding, the payment is $2,022.62 a month for principal and interest. Over 360 payments you would pay about $408,142 in interest, more than the amount borrowed.
Canada vs US: a C$500,000 mortgage at 5% over 25 years costs C$2,908.02 a month with Canadian semi-annual compounding, against $2,922.95 with US-style monthly compounding. Using the wrong setting overstates a Canadian payment by about $15 a month.
How extra payments save money
Every extra payment goes straight to the balance, so less interest builds up every month afterwards. On the example above, paying an extra $200 a month pays the loan off about 6½ years sooner and saves roughly $105,400 in interest. Enter an amount in Extra payment to see the saving, the new payoff date and both balance lines on the chart.
Pro-tip: before overpaying, check your mortgage terms. Many UK fixed-rate deals allow overpayments of up to 10% a year without an early repayment charge, and some US and Canadian loans have prepayment limits or penalties.
What this calculator does not include
| Cost | Where it applies | How to handle it |
|---|---|---|
| FHA MIP and CMHC insurance | US FHA loans; Canada below 20% down | FHA premiums follow different rules from PMI. In Canada the CMHC premium is usually added to the loan amount, so add it to the price |
| Stamp Duty Land Tax / Land Transfer Tax | UK, Canadian provinces | A one-off cost on purchase, not part of the monthly payment |
| Rate changes | Variable, tracker and adjustable-rate loans | The result assumes the rate stays the same for the whole term |
Important: this is an estimate for planning. Your lender's official disclosure (the US Loan Estimate, the UK ESIS or the Canadian cost-of-borrowing statement) is the figure to rely on. This page is not financial advice.
Frequently asked questions
How is a monthly mortgage payment calculated?
With the amortization formula M = P × i ÷ (1 − (1 + i)^−n), where P is the loan, i the monthly rate and n the number of payments. Each payment covers that month's interest first, and the rest reduces the balance.
Why are Canadian mortgage payments lower than US payments at the same rate?
Canada's Interest Act requires fixed-rate mortgage interest to be compounded semi-annually rather than monthly. That gives a slightly lower effective monthly rate, so the payment is a little lower.
How much do I save with a 15-year mortgage instead of 30 years?
The monthly payment is higher, but you pay interest for half as long. At 6.5% on $320,000, a 15-year loan costs about $2,788 a month and roughly $181,800 in total interest, compared with about $408,100 over 30 years.
Does the payment include property tax and insurance?
Only if you enter them. Add your yearly property tax and home insurance and the calculator shows the full monthly cost as well as principal and interest on its own.