A 30-year amortization lowers the monthly payment and raises the total interest; a 25-year amortization does the reverse. Neither is better in every case: the choice comes down to whether lower required payments and easier qualifying are worth paying more interest and building equity more slowly. The tables below put numbers on that trade-off. This comparison is part of our mortgage types hub.
Who can choose 30 years
With 20% or more down, the lender sets the amortization limit, and many lenders allow 30 years. With less than 20% down, a 30-year insured amortization is open to first-time buyers and to anyone buying a newly built home; other insured buyers are limited to 25 years. The 30-year amortization rules explain who qualifies and how CMHC defines a first-time buyer and a new build.
Payment comparison
$500,000 mortgage at 5%
| 25 years | 30 years | Difference | |
|---|---|---|---|
| Monthly payment | $2,908 | $2,668 | $240 a month less with 30 years |
| Total paid | $872,407 | $960,643 | |
| Total interest | $372,407 | $460,643 | $88,236 more with 30 years |
Other loan sizes at 5%
| Mortgage | 25-year payment | 30-year payment | Lower payment with 30 years | Extra interest with 30 years |
|---|---|---|---|---|
| $300,000 | $1,745 | $1,601 | $144 | $52,941 |
| $400,000 | $2,326 | $2,135 | $192 | $70,589 |
| $500,000 | $2,908 | $2,668 | $240 | $88,236 |
| $700,000 | $4,071 | $3,736 | $335 | $123,530 |
| $1,000,000 | $5,816 | $5,337 | $479 | $176,471 |
Figures assume the rate stays at 5% for the whole amortization, with payments calculated the Canadian way (semi-annual compounding). In practice the rate resets at each renewal, as the term vs amortization guide explains. For your own numbers, use the mortgage amortization calculator.
Equity: how much you’ve paid off
The lower 30-year payment puts less toward principal each month, so the balance falls more slowly. On the same $500,000 at 5%:
| After | Paid off, 25 years | Paid off, 30 years |
|---|---|---|
| 5 years | $57,462 | $41,191 |
| 10 years | $131,019 | $93,920 |
| 15 years | $225,178 | $161,417 |
These count principal repaid only, not any change in the home’s value.
Qualifying for a larger mortgage
Lenders test your GDS and TDS ratios using the payment at the stress-test qualifying rate, and a 30-year payment is smaller at any rate. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. At a qualifying rate of 7%, a 25-year payment of $700 per $100,000 borrowed falls to $659 over 30 years, so the same qualifying payment supports about 6% more mortgage. Your actual limit depends on income, other debts, property tax and heating; the mortgage affordability calculator works it out, and the stress test guide explains the qualifying rate.
Pros and cons
| 25 years | 30 years | |
|---|---|---|
| Monthly payment | Higher | Lower |
| Total interest | Less | More |
| Equity | Builds faster | Builds slower |
| Mortgage-free | 5 years sooner | 5 years later |
| Qualifying | Smaller maximum mortgage | Larger maximum mortgage |
| Insured premium | Standard schedule | 0.20 points added on an insured 30-year mortgage (CMHC insurance costs) |
Take 30 years, pay like 25
One way to keep both options is to choose a 30-year amortization and voluntarily pay the 25-year amount, using the lender’s prepayment privileges (payment increases or lump sums). On the $500,000 example, that means paying $2,908 instead of the required $2,668: at the same rate the mortgage is paid off in about 25 years, and in a tight month you can drop back to the lower required payment. The approach only saves interest if the extra amount is actually paid each month; prepayment limits and fees differ by lender, so check them in the mortgage contract. More ways to shorten the amortization are in paying off a mortgage early.
Which fits which situation
| A 25-year amortization tends to fit when | A 30-year amortization tends to fit when |
|---|---|
| The 25-year payment fits the budget comfortably | The 25-year payment would strain the budget |
| Paying less total interest is the priority | Qualifying for the needed mortgage is the priority |
| Retirement is less than 30 years away | Income is variable and a lower required payment adds a buffer |
| You don’t need the extra borrowing room | You plan to prepay when cash flow allows |
Investing the difference
Some borrowers take 30 years and invest the payment difference instead. That comes out ahead only if the after-tax return on the investments beats the mortgage rate over the period and the money is actually invested every month, not spent. If either assumption fails, the 30-year amortization simply costs more interest.
Related resources
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Mortgage rates, fixed 5 years and over: uninsured residential mortgages, funds advanced (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Data table
- CMHC: CMHC Purchase
- CMHC: Home Start
- Department of Finance Canada: Boldest mortgage reforms in decades come into force today
- Financial Consumer Agency of Canada: How much you need for a down payment
- Justice Laws (Canada): Bank Act
- Justice Laws (Canada): Interest Act
- Justice Laws (Canada): Eligible Mortgage Loan Regulations
- OSFI: OSFI exempts uninsured mortgage straight switches from the prescribed MQR andβ¦
- OSFI: Amendments to the minimum qualifying rate for uninsured mortgages