CMHC Insurance Explained: Do You Need It and How Much Does It Cost?
CMHC insurance — formally called mortgage default insurance — is mandatory in Canada whenever your down payment is less than 20% of the purchase price, and it costs between 0.60% and 4.00% of your mortgage amount depending on how much you put down. On a $500,000 home with a 5% down payment, the premium is $19,000, added directly to your mortgage balance rather than paid in cash. This guide explains exactly when CMHC insurance is required, what it costs at every down payment tier, and the provincial sales tax that catches many buyers in Ontario, Quebec, and Saskatchewan off guard.
Disclaimer: This is general information, not financial or legal advice. Your specific premium, insurer, and eligibility are confirmed by your lender at underwriting. Confirm exact figures with a licensed mortgage professional before relying on these numbers.
What CMHC Insurance Actually Protects — And Who Pays For It
CMHC insurance protects the lender, not you, if you default on your mortgage — yet the borrower pays the entire premium. This often confuses first-time buyers: despite the name "insurance," it provides no benefit or payout to you directly. If you stop making payments, the insurer reimburses your lender for the loss and then pursues you separately for any shortfall.
Three companies provide mortgage default insurance in Canada: the Canada Mortgage and Housing Corporation (CMHC), a federal Crown corporation; Sagen (formerly Genworth Canada); and Canada Guaranty, both private insurers. All three use an identical premium rate schedule and underwriting criteria — your lender selects which insurer to use, and the cost to you is the same regardless of which one they choose. A minimum credit score of 680 is required from at least one borrower (or guarantor) to qualify with any of the three.
When Is CMHC Insurance Required?
CMHC insurance is mandatory whenever all three of the following conditions apply: your down payment is less than 20% of the purchase price, the purchase price is below $1,500,000, and the property will be your principal residence. Above $1.5 million, mortgage default insurance is not available at any down payment level — buyers at this price point must put down at least 20% by definition, since no insurer will cover the loan.
The $1.5 million insured-price cap is relatively new: it was raised from $1 million effective December 15, 2024, as part of a federal mortgage reform package. This change meaningfully expanded high-ratio (less-than-20%-down) purchasing power in expensive markets like Toronto and Vancouver, where many homes previously fell above the old $1 million ceiling and required 20% down by default.
CMHC Insurance Premium Rates by Down Payment
The CMHC premium rate is determined entirely by your loan-to-value (LTV) ratio — the smaller your down payment, the higher the percentage you pay. The premium is calculated on the mortgage amount (purchase price minus down payment), not the full purchase price.
| Down Payment | Loan-to-Value | Premium Rate (25-Year Amortization) | Premium Rate (30-Year Amortization) |
|---|---|---|---|
| 5% (minimum) | 95% | 4.00% | 4.20% |
| 10% | 90% | 3.10% | 3.30% |
| 15% | 85% | 2.80% | 3.00% |
| 20–24.99% | 80% | 2.40% (non-owner-occupied / portable insurance only) | n/a |
| 25–34.99% | 65–75% | 1.70% | n/a |
| 35%+ | under 65% | 0.60% | n/a |
The 30-year amortization surcharge of +0.20% applies to every tier and is only available to first-time buyers (on any eligible insured purchase) or buyers of newly constructed homes. The 20-24.99% and 25%+ tiers generally apply only in specific scenarios like portable insurance or non-owner-occupied properties, since most buyers with 20%+ down do not require insurance at all. Rates current as of 2026 per Ratehub.ca, CalcNorth, and Sphera Credit's published premium schedules.
Worked Example: What CMHC Insurance Actually Costs
On a $500,000 home with a 5% down payment, the mortgage amount is $475,000, and the CMHC premium at the 4.00% tier is $19,000 — added directly to your mortgage balance, bringing your total loan to $494,000.
The real cost is higher than the upfront premium figure suggests, because you pay interest on the premium for the entire amortization period. At a 4.20% rate over 25 years, a $19,530 premium (30-year amortization tier) compounds to approximately $31,000 in total cost once interest is included — nearly double the stated premium. This is the single most overlooked aspect of CMHC insurance: the number on your mortgage statement at closing is not the true cost of the insurance over the life of your loan.
Moving from 5% down to 10% down on the same $500,000 home drops the premium from $19,000 to approximately $13,950 (3.10% × $450,000) — a direct saving of roughly $5,050, plus you borrow $25,000 less, plus the lower base loan accrues less interest over 25 years. Combined, the total savings from crossing this one threshold can exceed $20,000 over the life of the mortgage. Use our CMHC Insurance Calculator to model your specific premium at different down payment levels.
Provincial Sales Tax on CMHC Insurance: A Commonly Missed Closing Cost
Three provinces charge provincial sales tax directly on the CMHC insurance premium, and this tax must be paid in cash at closing — it cannot be added to your mortgage like the premium itself.
| Province | PST Rate on Premium | Example: PST on a $19,000 Premium |
|---|---|---|
| Ontario | 8% | $1,520 |
| Quebec | 9.975% | $1,895 |
| Saskatchewan | 6% | $1,140 |
| All other provinces | 0% | $0 |
PST applies regardless of which insurer (CMHC, Sagen, or Canada Guaranty) your lender uses. This is one of the most commonly underestimated closing costs for first-time buyers in these three provinces — budget for it as a mandatory out-of-pocket expense, separate from your down payment and other closing costs.
How to Reduce or Avoid CMHC Insurance
- Reach the 20% down payment threshold. The most direct way to avoid CMHC insurance entirely. On a $600,000 home, the difference between 5% down ($30,000) and 20% down ($120,000) eliminates a premium that could otherwise exceed $22,000, plus avoids paying interest on that premium over the life of the loan.
- Combine FHSA and HBP to accelerate savings. A couple where both partners qualify can access up to $200,000 in tax-advantaged funds combined ($120,000 from HBP plus $80,000 from FHSA) — potentially reaching the 20% threshold faster than relying on regular savings alone. See our First-Time Homebuyer Guide for Canada for details.
- Pay the premium upfront in cash instead of financing it. Most lenders allow this. It eliminates the compounded interest cost — which can be $10,000–$15,000+ over 25 years on a typical premium — but requires additional cash at closing that most buyers don't have available after the down payment itself.
- Consider a portfolio (uninsured) mortgage. Some credit unions offer uninsured mortgages at less than 20% down without requiring CMHC insurance, though typically at a slightly higher interest rate. This is a niche option worth discussing with a mortgage broker if CMHC eligibility is a concern for other reasons.
- Don't assume waiting to save more always wins. If home prices are rising faster than you can save the extra down payment, buying sooner with a higher premium can sometimes be the better financial decision than waiting to reach 20% down. Model both scenarios with our Affordability Calculator before deciding.
Frequently Asked Questions About CMHC Insurance
Do I need CMHC insurance if I put down 20%?
No. CMHC insurance (mortgage default insurance) is only required when your down payment is less than 20% of the purchase price. Once you reach a 20% down payment, your mortgage is considered "uninsured" or "conventional," and no default insurance premium applies. Uninsured mortgages sometimes carry a slightly higher interest rate (typically 0.10%–0.30%) to compensate the lender for the additional risk it now bears directly.
How much does CMHC insurance cost on a $500,000 home?
On a $500,000 home with a 5% down payment ($25,000), the mortgage amount is $475,000, and the CMHC premium at the 4.00% rate is $19,000 — added to your mortgage balance. With 10% down ($50,000), the mortgage amount drops to $450,000 and the premium drops to the 3.10% tier, or approximately $13,950 — a saving of roughly $5,050 plus a smaller base loan. This is general information; your lender confirms your exact premium at underwriting.
Can I buy a home over $1.5 million with less than 20% down?
No. CMHC insurance is not available on properties priced at $1.5 million or above, regardless of how much you intend to put down. This cap was raised from $1 million to $1.5 million effective December 15, 2024. Any purchase at or above $1.5 million requires a conventional (uninsured) mortgage with at least 20% down.
Does CMHC insurance transfer if I refinance or renew my mortgage?
It depends. If you are simply renewing your existing mortgage (not refinancing or increasing the loan amount), no new insurance is required — your original coverage continues. However, if you refinance and your equity is still below 20% of the home's current value, you may need new insurance at the current premium rates, which could differ from what you originally paid. This is general information — confirm your specific situation with your lender before refinancing.
Is there sales tax on CMHC insurance?
Yes, in three provinces. Ontario charges 8% PST, Quebec charges 9.975%, and Saskatchewan charges 6% — all calculated on the insurance premium itself, not the mortgage amount. This tax must be paid in cash at closing and cannot be added to your mortgage, unlike the premium itself. On a $19,000 premium, this adds $1,520 in Ontario, $1,895 in Quebec, or $1,140 in Saskatchewan as an out-of-pocket closing cost. All other provinces charge no PST on mortgage insurance premiums.
More Resources for Canadian Homebuyers
Use our CMHC Insurance Calculator to estimate your exact premium at different down payment levels, and our Affordability Calculator to model your full purchase budget including insurance costs. For a complete picture of buying your first home, see our First-Time Homebuyer Guide for Canada.