The Canadian mortgage math behind our calculator — including semi-annual compounding, payment frequency formulas, and CMHC premium calculations explained clearly.
If you've ever used a US mortgage calculator and noticed the numbers don't quite match what a Canadian lender tells you, there's a specific reason: the way interest is compounded is different between the two countries.
In the United States, mortgage interest is compounded monthly. In Canada, the Interest Act requires that mortgages be compounded no more frequently than semi-annually. This means Canadian mortgage interest compounds twice per year, not 12 times. The practical effect is that for the same stated interest rate, a Canadian mortgage has a slightly lower effective rate than a US mortgage would. Our calculator uses the correct Canadian compounding formula.
To calculate your effective monthly rate from a Canadian mortgage rate, we use:
Once we have the effective monthly rate, we use the standard mortgage payment formula to calculate your payment.
Monthly: 12 payments per year. Payment = P × r / (1 − (1+r)^−n) where r is monthly rate and n is total months.
Bi-weekly: 26 payments per year. We calculate the monthly payment and divide by 2 × 12/26. The result is slightly less than half the monthly payment.
Accelerated bi-weekly: Also 26 payments per year, but each payment equals exactly half the monthly payment — not the recalculated bi-weekly amount. This results in one extra monthly payment per year, which accelerates principal repayment and reduces total interest paid and amortization length significantly.
We calculate CMHC mortgage default insurance based on current published premium rates from CMHC, Sagen, and Canada Guaranty (all three use the same rates as set by federal guidelines). The premium is applied to the mortgage amount (not the purchase price) and added to your mortgage balance. In Alberta, no PST applies to this premium.
The amortization table is generated by simulating each month of your mortgage. For each month, we calculate the interest portion (current balance × monthly rate), the principal portion (payment − interest), and the remaining balance. We then group these by year for the annual summary table. This produces an exact calculation, not an approximation.
For full disclosure, here is what our calculator estimates rather than calculates precisely:
CMHC premium rates are sourced from CMHC's published rate schedule. Down payment rules reflect federal government guidelines as of the date shown. This calculator is updated when regulations change. Last updated: May 8, 2025.