Updated: April 2025  |  bremo.io financial guides

CMHC Mortgage Insurance Canada: What It Costs + How It Works

CMHC mortgage insurance — officially called mortgage default insurance — is required for nearly all Canadian homebuyers who put down less than 20% of the purchase price. It is one of the most misunderstood costs in real estate: many buyers confuse it with home insurance or life insurance, and many do not realize it protects the lender, not the borrower. Here is everything you need to know.

What Is CMHC Mortgage Insurance?

CMHC (Canada Mortgage and Housing Corporation) mortgage insurance is a government-backed insurance policy that protects lenders — not borrowers — against mortgage default. If a borrower stops making payments and the lender cannot recover the full loan amount through power of sale, CMHC reimburses the lender for the shortfall. The borrower still owes the full debt.

Despite protecting the lender, the borrower pays the premium. This is the deal: in exchange for paying mortgage insurance, you can access a mortgage with as little as 5% down instead of 20%, opening the door to homeownership years earlier for many Canadians.

Who Provides Mortgage Default Insurance in Canada?

Three providers are approved in Canada:

• CMHC (Canada Mortgage and Housing Corporation) — government-owned, the largest provider
• Sagen (formerly Genworth Canada) — private insurer
• Canada Guaranty — private insurer

Your lender chooses which insurer to use. For most borrowers, the choice between providers makes no difference — premium rates are identical across all three, and the coverage and terms are similar.

CMHC Insurance Premium Rates 2025

Premiums are based on your loan-to-value (LTV) ratio, which is determined by your down payment:

• Down payment 5.00%–9.99% (LTV 90.01%–95%): 4.00% of the insured loan amount
• Down payment 10.00%–14.99% (LTV 85.01%–90%): 3.10% of the insured loan amount
• Down payment 15.00%–19.99% (LTV 80.01%–85%): 2.80% of the insured loan amount

A provincial sales tax (PST) applies to the CMHC premium in Manitoba, Ontario, and Quebec. This tax must be paid in cash at closing — it cannot be added to the mortgage.

How the CMHC Premium Is Calculated

The premium is applied to the amount of the mortgage, not the purchase price. Here are worked examples:

Example 1: $500,000 Purchase, 5% Down

• Purchase price: $500,000
• Down payment: $25,000 (5%)
• Mortgage amount: $475,000
• CMHC premium: 4.00% × $475,000 = $19,000
• Total mortgage with premium: $494,000

Example 2: $500,000 Purchase, 10% Down

• Down payment: $50,000 (10%)
• Mortgage amount: $450,000
• CMHC premium: 3.10% × $450,000 = $13,950
• Total mortgage with premium: $463,950

Example 3: $750,000 Purchase, 15% Down

• Down payment: $112,500 (15%)
• Mortgage amount: $637,500
• CMHC premium: 2.80% × $637,500 = $17,850
• Total mortgage with premium: $655,350

Does the CMHC Premium Get Added to Your Mortgage?

Yes. The CMHC premium is almost always added to your mortgage balance and amortized over the life of your loan. You do not pay it as a lump sum at closing (though you can if you prefer). Because it is added to your mortgage, you pay interest on it for the full amortization period. This makes the true cost significantly higher than the face value of the premium.

When Is Mortgage Insurance Required?

CMHC insurance is mandatory when:

• Down payment is less than 20% of the purchase price
• The property is owner-occupied (you live in it)
• The purchase price is below $1,500,000 (the insured mortgage cap as of 2024)
• The borrower meets minimum credit and qualification requirements
• The amortization is 25 years or less (standard insured limit)

When Is Mortgage Insurance NOT Available?

• Purchase price at or above $1,500,000 — conventional 20% down required
• Rental or investment properties (though rental suites in owner-occupied properties may qualify)
• Properties outside Canada
• Refinances (mortgage insurance cannot be used for a refinance — only purchase)
• Amortizations beyond 25 years (except new builds with first-time buyers as of 2024)

Insured Mortgages Often Have Better Rates

A counterintuitive fact: insured mortgages (with CMHC) often carry lower interest rates than uninsured (conventional) mortgages. This is because the lender's risk is almost entirely eliminated by the insurance. Lenders compete aggressively for insured mortgages. The rate differential between insured and uninsured mortgages is typically 0.10%–0.30%, which partially offsets the cost of the premium — but rarely eliminates it entirely.

CMHC Insurance and Portability

If you sell your home and buy another one, your existing CMHC insurance can often be "ported" to the new mortgage. This means you avoid paying a new premium if your loan amount does not increase significantly. Portability rules vary by insurer and require proper documentation of the transfer.

Does CMHC Insurance Cover Job Loss or Disability?

No. CMHC mortgage insurance does not protect borrowers in cases of job loss, disability, death, or other life events. If you want that kind of protection, you need separate mortgage life insurance, disability insurance, or critical illness insurance — purchased from a life insurer, not CMHC.

Is CMHC Insurance Worth It?

For most first-time buyers, yes. The alternative to paying CMHC insurance is saving a 20% down payment, which in markets like Toronto or Vancouver means accumulating $200,000–$400,000+ — a process that takes years while home prices may continue rising. The CMHC premium allows buyers to enter the market with 5–19% down. The cost of the premium is significant but often smaller than the cost of delayed entry into appreciating markets. That said, each situation is different — if you can reach 20% down within 1–2 years, it may be worth waiting to avoid the premium.

PST on CMHC Premiums

In Ontario, Manitoba, and Quebec, provincial sales tax applies to the CMHC premium amount. In Ontario: 8% PST. Manitoba: 7%. Quebec: 9%. This tax is due at closing and cannot be rolled into the mortgage. For a $19,000 CMHC premium in Ontario, the PST cost is $1,520 — payable in cash.