Key Takeaway

CMHC mortgage insurance is required in Canada when your down payment is less than 20 per cent of the purchase price. The premium ranges from 0.60 per cent to 4.00 per cent of your mortgage amount, depending on the size of your down payment. The smaller your down payment, the higher the premium rate. You can pay the premium upfront or add it to your mortgage principal, and the cost is calculated based on your loan-to-value ratio.

What Is CMHC Mortgage Insurance?

CMHC mortgage default insurance protects lenders when you buy a home with a down payment of less than 20 per cent. This insurance, provided by the Canada Mortgage and Housing Corporation, allows Canadians to enter the housing market with a minimum down payment of 5 per cent on homes priced up to C$500,000.

According to the Canada Mortgage and Housing Corporation, mortgage default insurance reduces the lender’s risk and enables you to qualify for a mortgage with a smaller down payment (CMHC, 2026). The insurance does not protect you as the borrower. It protects the lender if you default on your mortgage payments.

While CMHC is the most recognized provider, mortgage default insurance is also available through Sagen (formerly Genworth Canada) and Canada Guaranty. The premium rates are similar across all three insurers and are regulated federally.

When You Need CMHC Insurance

You must purchase mortgage default insurance whenever your down payment is less than 20 per cent of the purchase price. This requirement applies to most residential properties in Canada, though some exceptions exist for certain property types and non-traditional lending scenarios.

Your loan-to-value ratio (LTV) determines whether insurance is mandatory. The LTV is calculated by dividing your mortgage amount by the purchase price. A C$400,000 home with a C$30,000 down payment (7.5 per cent) results in a C$370,000 mortgage and an LTV of 92.5 per cent, triggering the insurance requirement.

Even if you have a 20 per cent down payment, some lenders may require insurance for borrowers with weaker credit profiles or non-standard income sources, though this is less common.

How CMHC Premiums Are Calculated

The premium is calculated as a percentage of your total mortgage amount, not the purchase price. The rate you pay depends entirely on your loan-to-value ratio. As outlined in foundational finance texts such as Principles of Finance, risk-based pricing reflects the higher default risk associated with higher LTV mortgages.

The premium rates as of August 2026 are structured as follows:

  • LTV up to 65 per cent: 0.60 per cent premium
  • LTV 65.01 to 75 per cent: 0.70 per cent premium
  • LTV 75.01 to 80 per cent: 1.25 per cent premium
  • LTV 80.01 to 85 per cent: 1.80 per cent premium
  • LTV 85.01 to 90 per cent: 2.40 per cent premium
  • LTV 90.01 to 95 per cent: 4.00 per cent premium

For example, a C$380,000 mortgage (C$400,000 purchase price with a C$20,000 down payment, or 5 per cent) has an LTV of 95 per cent. The premium is 4.00 per cent of C$380,000, which equals C$15,200. You can pay this amount upfront at closing or add it to your mortgage, making your total mortgage C$395,200.

Read also: CMHC Mortgage Insurance in Canada: When You Need It and What It Costs

The premium is subject to provincial sales tax in Ontario, Quebec, and Saskatchewan, which increases the total cost. In Ontario, for instance, the 8 per cent PST on a C$15,200 premium adds C$1,216.

Key Factors That Affect Your Premium

Your down payment size is the single most important factor. Every percentage point you add to your down payment can move you into a lower premium tier. Increasing your down payment from 5 per cent to 10 per cent drops your premium rate from 4.00 per cent to 2.40 per cent, a significant savings.

The property purchase price matters because it determines the minimum down payment you can make. For homes priced at C$500,000 or less, the minimum down payment is 5 per cent. For homes priced between C$500,000 and C$1 million, you must put down 5 per cent on the first C$500,000 and 10 per cent on the portion above that amount. Properties over C$1 million cannot use mortgage default insurance and require a minimum 20 per cent down payment.

Whether you add the premium to your mortgage or pay it upfront affects your total borrowing costs. Adding the premium increases your mortgage principal, which means you pay interest on the insurance cost over the life of your mortgage term and amortization period.

Using the CMHC Calculator

Our CMHC mortgage insurance calculator lets you estimate your premium quickly by entering your purchase price and down payment amount. The calculator shows your loan-to-value ratio, the applicable premium rate, the total premium cost, and your final mortgage amount if you choose to add the premium to your principal.

You can adjust the down payment amount to see how different scenarios affect your premium. This helps you decide whether saving for a larger down payment makes financial sense before you buy, or whether entering the market sooner with a smaller down payment and higher premium better fits your circumstances.

The calculator provides an estimate based on standard CMHC premium rates. Your actual premium may vary slightly depending on the insurer your lender uses and any applicable provincial sales tax. Always confirm the final premium cost with your mortgage broker or lender before finalizing your mortgage application.

Next Steps

Understanding your CMHC insurance premium helps you budget accurately for your home purchase. Use the calculator to model different down payment scenarios and see the trade-off between saving longer for a larger down payment versus entering the market sooner with a higher premium.

When you are ready to move forward, connect with a licensed mortgage broker who can confirm current premium rates, explain how the premium fits into your total closing costs, and help you navigate the qualification process under the OSFI mortgage stress test.

Financial Disclaimer

This article provides general educational information about CMHC mortgage default insurance premiums and calculation methods. It is not personalized financial, lending, or legal advice, and is not an offer or commitment to lend. Mortgage insurance premium rates, down payment requirements, and available programs vary by insurer, lender, property type, and province or territory. Rates and qualification rules change regularly. Verify current premium rates, confirm your eligibility, and review your total borrowing costs with a licensed mortgage broker or financial institution for your personal situation before making any mortgage decision. Consult a qualified tax professional regarding the tax treatment of mortgage insurance premiums in your province.