Key Takeaway

CMHC mortgage default insurance is mandatory in Canada when you make a down payment of less than 20 per cent of the purchase price. The insurance protects the lender if you default, but you pay the premium, which ranges from 0.60 per cent to 4.00 per cent of your mortgage amount depending on the size of your down payment. The premium is typically added to your mortgage balance and paid over the life of the loan, though you can pay it upfront.

When CMHC Insurance Is Required

According to the Canada Mortgage and Housing Corporation, mortgage default insurance is required by law when your down payment is less than 20 per cent of the home’s purchase price (CMHC, 2026). This threshold translates to a loan-to-value (LTV) ratio above 80 per cent.

If you put down 20 per cent or more, you have what lenders call a conventional mortgage and insurance is not required. For example, on a C$500,000 home, a down payment of C$100,000 (20 per cent) means no insurance is needed, while a C$75,000 down payment (15 per cent) triggers the insurance requirement.

The minimum down payment in Canada is 5 per cent for homes priced up to C$500,000. For the portion of the price above C$500,000 up to C$1 million, you need at least 10 per cent down. Homes over C$1 million require a minimum 20 per cent down payment and therefore do not qualify for CMHC insurance.

What CMHC Insurance Costs

CMHC premium rates are tiered based on your LTV ratio. As of October 2026, the rates are:

  • 5 per cent to 9.99 per cent down (90.01 per cent to 95 per cent LTV): 4.00 per cent premium
  • 10 per cent to 14.99 per cent down (85.01 per cent to 90 per cent LTV): 3.10 per cent premium
  • 15 per cent to 19.99 per cent down (80.01 per cent to 85 per cent LTV): 2.80 per cent premium

The premium is calculated on the mortgage amount, not the purchase price. For a C$400,000 home with a 10 per cent down payment (C$40,000), your mortgage is C$360,000 and the premium at 3.10 per cent is C$11,160.

According to the Financial Consumer Agency of Canada, most borrowers add this premium to their mortgage balance rather than paying it upfront, which means you pay interest on the premium amount over the life of your mortgage (FCAC, 2026).

How the Insurance Works

CMHC mortgage insurance protects the lender, not you as the borrower. If you default on your mortgage, CMHC compensates the lender for their loss. Despite protecting the lender, you pay the premium because the insurance allows lenders to offer mortgages with smaller down payments.

Read also: CMHC Mortgage Insurance Calculator in Canada: Estimate Your Premium

As foundational texts such as Principles of Finance explain, mortgage insurance reduces the lender’s risk exposure, which in turn expands access to homeownership for buyers who have not yet saved a full 20 per cent down payment.

You still need to qualify for the mortgage under the OSFI mortgage stress test, which requires you to qualify at either the contract rate plus 2 percentage points or the Bank of Canada qualifying rate, whichever is higher. CMHC insurance does not exempt you from this test.

Alternatives and Providers

While CMHC is the best-known provider, two private insurers also offer mortgage default insurance in Canada: Sagen (formerly Genworth Canada) and Canada Guaranty. All three providers use similar premium rate structures and operate under the same regulatory framework. Your lender typically selects the insurer, though the premiums and coverage are comparable across providers.

Premiums, down payment requirements, and qualifying criteria are set by federal regulation and may change. Always verify current rates and eligibility rules with a licensed mortgage broker or your financial institution before making decisions based on these figures.

Next Step

If you are planning to buy a home with less than 20 per cent down, calculate your total mortgage cost including the insurance premium to understand your true monthly payment and the amount you will pay over the full amortization period. Speak with a licensed mortgage professional to confirm your eligibility and compare offers from multiple lenders.

Financial Disclaimer: This article provides general educational information only and is not personalized financial, lending, legal, or tax advice. CMHC mortgage insurance requirements, premium rates, and down payment rules are subject to change and may vary by lender, property type, and your individual circumstances. Mortgage qualification depends on income, credit, the OSFI stress test, and other factors specific to your situation. For advice tailored to your circumstances, consult a licensed mortgage broker, the Financial Consumer Agency of Canada, or a qualified financial professional. This content does not constitute an offer or commitment to lend.