Canadian Mortgage Explained — CMHC, Stress Test & Semi-Annual Compounding
The Canadian-specific mechanics most videos skip: why the semi-annual compounding formula produces a different payment than the US formula, how the CMHC premium is calculated and added to principal, and what the stress test actually tests.
What you'll learn
- The Interest Act formula: (1 + annual rate ÷ 2)^(2÷12) − 1 and how it differs from the US monthly rate
- CMHC premium tiers by down payment (2.80%, 3.10%, 4.00%) and how they are added to the mortgage
- Provincial premium tax on CMHC (paid in cash in ON, QC, SK, MB at closing)
- Stress test mechanics: qualifying at contract rate + 2% (or 5.25% floor) and how it reduces borrowing power