Frequently Asked Questions
What is CMHC mortgage default insurance?
CMHC (Canada Mortgage and Housing Corporation) mortgage default insurance protects lenders — not borrowers — in case of default. It is required for all mortgages where the down payment is less than 20% of the purchase price. The premium is paid by the borrower and is typically added to the mortgage balance. CMHC insurance allows lenders to offer mortgages to buyers with as little as 5% down.
Is CMHC insurance worth it, or should I wait to save 20%?
It depends on your market and situation. In a rising market, buying sooner with CMHC may gain you more in appreciation than you pay in premiums. In a flat or declining market, waiting to save 20% saves you $100–$20,000+ in insurance costs. Run the numbers for your specific price point and market conditions. CMHC premiums are significant but not always the wrong choice.
What homes qualify for CMHC insurance in Canada?
CMHC insurance is available for homes priced under $1.5 million (as of late 2024, increased from $1M). The property must be in Canada, and the buyer must qualify under the mortgage stress test. The maximum amortization for insured mortgages is currently 30 years (increased in 2024 for first-time buyers on new construction). The property must be the buyer's principal residence.
How do I avoid CMHC insurance?
The only way to avoid CMHC (or equivalent insurer Sagen/Canada Guaranty) premiums is to put down 20% or more on the purchase. The three main strategies: (1) save a larger down payment using FHSA + RRSP HBP + high-interest savings, (2) buy a less expensive home where 20% is achievable, or (3) receive a gift or inheritance that brings your down payment to 20%.