CMHC Mortgage Insurance Canada Guide

What mortgage default insurance is, what it costs, and how to minimize or avoid it entirely.

What Is CMHC Mortgage Insurance?

CMHC (Canada Mortgage and Housing Corporation) mortgage insurance — more accurately called mortgage default insurance — protects lenders, not borrowers, against the risk of mortgage default. In Canada, any mortgage with less than a 20% down payment must be insured by one of three providers: CMHC, Sagen (formerly Genworth Canada), or Canada Guaranty. The premium is paid by the borrower and protects the lender if the borrower stops making payments.

Despite protecting the lender, insured mortgages often come with lower interest rates than conventional (uninsured) mortgages because lenders face less risk. This partially offsets the premium cost.

CMHC Premium Rates (2025)

Down Payment	Loan-to-Value (LTV)	CMHC Premium
5% – 9.99%	90.01% – 95%	4.00% of mortgage amount
10% – 14.99%	85.01% – 90%	3.10% of mortgage amount
15% – 19.99%	80.01% – 85%	2.80% of mortgage amount
20%+	80% or less	No insurance required

Real Dollar Cost Examples

Home Price	Down Payment	Mortgage Amount	CMHC Premium	Added to Mortgage
$500,000	$25,000 (5%)	$475,000	$19,000 (4.00%)	$494,000
$500,000	$50,000 (10%)	$450,000	$13,950 (3.10%)	$463,950
$600,000	$42,500 (~7%)	$557,500	$22,300 (4.00%)	$579,800
$800,000	$65,000 (~8.1%)	$735,000	$29,400 (4.00%)	$764,400

The premium is typically added to your mortgage balance and amortized over the life of the loan. You also pay PST on the premium in some provinces (Ontario: 8%, Quebec: 9%), which must be paid in cash at closing — it cannot be added to the mortgage.

When CMHC Insurance Is Required

• Down payment is less than 20% of purchase price
• Purchase price is under $1,500,000 (as of December 2024 — previous cap was $1M)
• Property must be in Canada and owner-occupied (primary or secondary residence)
• Amortization must not exceed 25 years for most borrowers (30 years for qualifying first-time buyers of new construction)

What CMHC Insurance Does NOT Cover

• Investment properties or rental-only properties (though duplexes with owner occupancy may qualify)
• Properties priced at $1.5 million or more
• Refinancing (CMHC insurance is only for purchase mortgages)
• Second mortgages or home equity loans

Alternatives to CMHC: Sagen and Canada Guaranty

CMHC is the government-owned insurer, but the private alternatives — Sagen and Canada Guaranty — offer identical premium rates and similar qualifying criteria. Some lenders prefer one provider over another, and there are minor differences in their policies for non-standard situations (self-employed, new to Canada, etc.). Your broker will know which insurer suits your situation.

How to Avoid CMHC Insurance Entirely

The cleanest way to avoid mortgage default insurance is to save a 20% down payment. On a $600,000 home, that means $120,000 in cash — a daunting figure in major Canadian cities. Some strategies to get there faster:

• Maximize FHSA contributions ($8,000/year, tax-deductible)
• Use the RRSP Home Buyers' Plan (up to $60,000 per person)
• Buy in a lower-cost market, then upgrade later
• Accept a gift or loan from family
• Consider a longer savings period — the premium savings are significant

A borrower who saves 20% instead of 5% on a $500,000 home avoids $19,000 in CMHC premiums. That $19,000 added to the mortgage at 5% over 25 years actually costs approximately $33,000 in total payments. The motivation to save more is real and mathematically significant.