Mortgage Amortization Period in Canada: 25, 30, 35 or 40 Years

This page covers the amortization period on a Canadian mortgage: choosing 25 or 30 years, the 30-year rules, 35- and 40-year amortizations, and extending the amortization later.

25 or 30 years

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%

Other loan sizes at 5%

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%:

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

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

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.

30-year amortization

An insured mortgage (one with less than 20% down) can now be amortized over up to 30 years if at least one borrower is a first-time home buyer or the home is newly built. Every other insured purchase is still limited to 25 years. This page covers who qualifies for the longer amortization when buying a home. For stretching the amortization on a mortgage you already have, see extending your amortization at renewal, and for the payment and interest trade-off, see the 25 vs 30-year amortization comparison. It is one of the amortization guides in our mortgage types hub.

How the rules changed

The 30-year insured amortization arrived in two steps:

The same December 15, 2024 package raised the price cap for insured mortgages to $1.5 million. The federal government said the longer amortization would “reduce the cost of monthly mortgage payments so that more Canadians can afford a mortgage as they start their career.” The new mortgage rules roundup covers the other changes made at the same time.

Who qualifies for a 30-year insured amortization

The limit is set in the federal Eligible Mortgage Loan Regulations, which allow an insured purchase loan to be amortized over more than 25 years, up to 30, “if any of the borrowers is a first-time home buyer or if the eligible residential property against which the loan is secured is newly built.” CMHC offers it through its Home Start program, which is for high-ratio loans (more than 80% loan-to-value). The home still has to meet the other insured-mortgage rules, including a purchase price below $1.5 million and owner occupancy; the CMHC mortgage rules cover those.

One first-time buyer on the application is enough. With 20% or more down, the mortgage doesn’t need default insurance and these limits don’t apply: the lender sets the amortization, and some lenders go beyond 30 years (see extended amortizations). How insured, insurable and uninsurable mortgages differ is covered in insured vs uninsured mortgages.

Who counts as a first-time buyer

For Home Start, CMHC counts a borrower as a first-time homebuyer if, at the time of closing, they:

• have never purchased a home in Canada; or
• have not, in the current calendar year or the four preceding calendar years, lived as their principal residence in a home in Canada that they or their current spouse or common-law partner owned or jointly owned; or
• have been living separate and apart from their spouse or common-law partner for at least 90 days because the relationship broke down, and the separation began in the current calendar year or the four preceding calendar years.

The tests look at ownership history, not citizenship: Home Start also covers non-permanent residents who are legally authorized to work in Canada. Other first-time buyer programs, such as the Home Buyers’ Plan and FHSA, use their own definitions.

What counts as newly built

CMHC treats a home as newly built if it has not previously been occupied for residential purposes. For a condominium unit, a buyer who moved in on an interim basis before the condominium was registered, or before taking possession, doesn’t stop the unit from counting as newly built. A resale home is not newly built, however recently it was finished.

What the longer amortization costs

On a $500,000 mortgage at 4.5%, a 30-year amortization changes the monthly payment from $2,767 to $2,521, and total interest over the full amortization from $330,209 to $407,588. The 25 vs 30-year amortization comparison works through other loan sizes, equity build-up, qualifying power and paying a 30-year mortgage down on a 25-year schedule.

The insurance premium changes too. CMHC’s Home Start premiums add 0.20 percentage points to its standard 25-year rate at each loan-to-value band, so the same down payment costs more to insure over 30 years. The CMHC insurance calculator works out the premium for a given price and down payment.

The longer amortization doesn’t change the stress test. 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. A smaller payment at that qualifying rate is what lets a 30-year amortization support a larger loan; the stress test guide explains how it is applied.

Which lenders offer it

The amortization limits come from the federal rules for insured mortgages, so the 30-year option is a feature of insured lending rather than one lender’s product. What varies is who writes insured mortgages and how long an amortization each lender allows on an uninsured mortgage:

Confirm the maximum amortization with the lender before relying on it; a mortgage broker can compare several lenders at once.

35- and 40-year amortizations

An amortization longer than 30 years (35 or 40 years, and very occasionally 50) lowers the required monthly payment further, at the cost of much more interest and much slower equity. In Canada these long amortizations exist only on uninsured mortgages, so they need at least 20% down. This page covers amortizations beyond 30 years; for the 30-year option itself, including the insured 30-year amortization for first-time buyers and new builds, see the 30-year amortization rules and the 25 vs 30-year comparison. More amortization and product guides are in our mortgage types hub.

Amortization is the time it takes to pay the mortgage off; the term is the length of the current rate contract, which renews several times over the amortization. The term vs amortization guide explains the difference.

Why 35 and 40 years need 20% down

The federal rules for insured mortgages cap insured amortizations at 25 years, or 30 years for first-time buyers and new builds. No insured mortgage, from CMHC or a private insurer, can be amortized beyond 30 years. A 35 or 40-year amortization is therefore always an uninsured mortgage, which needs a down payment of at least 20% of the price. The differences between insured and uninsured mortgages, including how each is priced, are covered in insured vs uninsured mortgages.

Who offers 35 and 40-year amortizations

Each lender sets its own maximum amortization on uninsured mortgages. Many cap it at 30 years, so a 35 or 40-year amortization is usually found through:

• Alternative (B) lenders, which also tend to charge higher rates; see B-lender mortgages.
• Credit unions, which set their own amortization limits.
• Some monoline lenders, usually reached through a mortgage broker.
• Private lenders, at much higher rates and fees.

Availability changes with market conditions, so confirm the maximum amortization with the lender. A mortgage broker can check several lenders at once.

The longer amortization doesn’t get you around the stress test. 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. A longer amortization lowers the payment at that qualifying rate, which is why it can raise the maximum mortgage; the stress test guide has the details.

What a longer amortization costs

$500,000 mortgage at 5%

The figures assume the rate stays at 5% for the whole amortization; in practice it resets at each renewal. The 30-year figures for the same loan are in the 25 vs 30-year comparison. Each extra five years cuts the payment by less than the five before it, while the extra interest keeps growing.

Equity builds more slowly

These count principal repaid only, not any change in the home’s value. Slower equity means less room to borrow against the home later, a higher loan-to-value ratio if prices fall, and a smaller cushion if you need to sell.

Prepayments shorten the amortization

Most closed mortgages let you pay extra principal each year without a penalty, up to limits set in the contract; the prepayment privileges guide explains how they work. Extra monthly payments cut a long amortization sharply. On a $500,000 mortgage at 5% with a 35-year amortization:

You can also choose a shorter amortization at renewal if your income has grown; the mortgage renewal guide covers what can change at renewal. To model your own figures, use the mortgage amortization calculator.

When a 35 or 40-year amortization fits, and when it doesn’t

It tends to work badly when it stretches a purchase beyond what the budget can carry, when there is no plan to prepay or shorten it, when other high-interest debt should be paid first, or when retirement is close.

The “invest the difference” argument

Some borrowers take a long amortization and invest the payment savings. That only comes out ahead if the after-tax return beats the mortgage rate over the period and the savings really are invested every month. With a 35 or 40-year amortization the interest cost is large enough that the assumptions need to hold for a long time.

Extending your amortization

Extending the amortization means stretching what you still owe over more years than you have left. The lender recalculates the payment on the same balance over the longer period, so each payment is smaller and the loan takes longer to clear. It is most often asked for at renewal, when a higher rate would otherwise raise the payment, and sometimes mid-term when money is tight. This page covers an existing mortgage; choosing the amortization on a new purchase is a separate decision, covered under 25 vs 30 year amortization.

How an extension changes the payment and the interest

Take a $430,000 balance with 20 years of amortization left, renewing at 4.50% . Without an extension the payment is set to clear the balance in 20 years; each extra five years lowers it, and adds interest over the rest of the loan, assuming the rate stays the same throughout.

Two things drive the extra cost. The balance falls more slowly, so interest is charged on a larger amount for longer, and the extra years themselves carry interest. In practice the rate will change at each renewal, so the lifetime figures are a guide to scale rather than a forecast. The mortgage amortization calculator shows the year-by-year balance for any amortization.

When you can extend

At renewal with your current lender. Renewal is the usual moment, because the lender is writing a new term anyway. Whether it agrees, and how far it will stretch the amortization, is the lender’s decision; the renewal offer should show the amortization it is based on. If your lender is a bank or other federally regulated lender, its renewal statement arrives before the term ends, which is the point to ask.

Mid-term, when you’re in difficulty. A longer amortization is one of the relief measures regulators expect banks to consider. If you're at risk of mortgage default and working with your lender on a solution, a federally regulated lender such as a bank is expected to offer relief suited to your circumstances: for example a payment deferral (usually up to 4 months), waived prepayment penalties on a lump-sum payment that avoids negative amortization or when you sell your home, waived internal fees and no interest on interest for a limited period, or a longer amortization with a plan to restore it. Relief can raise what the mortgage costs in total. Mortgage payment deferral is the other common option, and the missed mortgage payment guide covers what happens if a payment slips before anything is agreed.

When switching lenders at renewal. Since November 21, 2024, OSFI no longer requires the minimum qualifying rate for a straight switch of an uninsured mortgage, which keeps the same amortization and balance (plus up to $3,000 for switching costs). Extending the amortization as part of the move takes it outside that exemption, so the new lender qualifies you again; switching mortgage lenders covers the rules for insured and uninsured loans.

By refinancing. A refinance replaces the mortgage with a new one, so the amortization can be reset, usually along with borrowing more. It means a new application and, mid-term, a prepayment penalty; how to refinance a mortgage walks through it and renewal vs refinance compares the two.

New purchases follow different rules

The amortization limits for insured mortgages on a home purchase are set by federal rules. Since December 15, 2024, insured 30-year amortizations have been open to all first-time buyers and all buyers of new builds; the 30-year amortization rules set out who qualifies.

The trade-off

An extension trades a lower payment now for more interest and slower equity later. It tends to help when:

• the payment at renewal would otherwise crowd out essentials, and the alternative is falling behind;
• income has dropped for a period you expect to end, such as a parental leave or a job search;
• the money freed up pays down debt at a higher rate than the mortgage.

It costs more for less benefit when the higher payment is affordable, when the mortgage is close to paid off (the extra years add interest on a balance that was about to disappear), or when the amortization has already been extended before.

Getting back to the original schedule

An extension doesn’t have to be permanent. Paying more than the new minimum, up to the limit your contract allows, brings the payoff date back. With the 25-year extension above , keeping up the 20-year payment of $2,711 instead of $2,380 clears the loan on the original 20-year schedule, as long as the rate doesn’t change. How much extra you can pay without a penalty depends on your prepayment privileges; the mortgage calculator with extra payments shows the effect of any amount. A lump-sum prepayment normally shortens the loan in the same way, while a mortgage recast takes the benefit of one as a lower payment instead. Switching to accelerated bi-weekly payments also pays the loan down faster, as explained in the payment frequency guide.

Asking for an extension

1. Work out the payment at the offered rate on your remaining amortization, and at the longer one you want; the mortgage renewal calculator does both.
2. Ask the lender the longest amortization it will offer on your mortgage, and whether any fee applies.
3. Check that the written renewal offer or amending agreement states the new amortization and payment.
4. Note the total interest at each amortization, so the extra cost is a known number.

For how much the payment rises at renewal in the first place, see payment shock at renewal. The mortgage payments hub lists the other guides on managing payments.

Related pages

• How a mortgage works
• Fixed vs variable mortgages
• Open vs closed mortgages
• Mortgage features