CMHC Mortgage Insurance Explained
A complete 2026 guide to Canada's mortgage default insurance — who needs it, how much it costs, and how to avoid it.
CMHC mortgage insurance (also called mortgage default insurance or high-ratio insurance) is a federally mandated insurance product that protects the lender — not the borrower — if a borrower defaults on their mortgage. It is required by Canadian law for any mortgage where the down payment is less than 20% of the home's purchase price.
The insurance is provided by one of three federally approved insurers: the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty. While CMHC is a Crown corporation, Sagen and Canada Guaranty are private insurers — all three operate under the same federal rules, and the premium amounts are nearly identical.
Despite costing the borrower, CMHC insurance also benefits the borrower indirectly: it allows first-time and lower-down-payment buyers to access homeownership with as little as 5% down, and insured mortgages typically receive the lowest available interest rates because there's no default risk to the lender.
| Down Payment | Loan-to-Value (LTV) | Premium Rate | Example ($500K home) |
|---|---|---|---|
| 5.00% – 9.99% | 90.01% – 95% | 4.00% | $19,000 premium |
| 10.00% – 14.99% | 85.01% – 90% | 3.10% | $13,950 premium |
| 15.00% – 19.99% | 80.01% – 85% | 2.80% | $11,900 premium |
| 20%+ | ≤ 80% | Not required | $0 premium |
The premium is calculated as a percentage of your mortgage amount (not the home price). It is added to your principal and amortized over the full term of your mortgage — meaning you pay interest on it for up to 25 years.
- Your down payment is less than 20% of the purchase price
- The home costs less than $1.5 million (the insured mortgage cap as of December 2024)
- The amortization is 30 years or less (25 years for non-first-time buyers on resale homes)
- The property is your principal residence or a 1-to-4 unit rental property you'll occupy
- You're a Canadian citizen, permanent resident, or non-permanent resident legally authorized to work
- Your down payment is 20% or more (a conventional mortgage)
- The home costs $1.5 million or more (must put 20% down minimum, no insurance available)
- You're purchasing a non-owner-occupied investment property (different insurance rules apply)
- You're renewing your mortgage at the same lender (insurance carries forward automatically)
In three provinces, you must also pay provincial sales tax on your CMHC premium — and this tax must be paid in cash at closing, not rolled into the mortgage:
- Ontario: 8% PST on the CMHC premium
- Quebec: 9% QST on the CMHC premium
- Saskatchewan: 6% PST on the CMHC premium
For example, on a $20,000 CMHC premium in Ontario, you'd owe an additional $1,600 in PST at closing. Budget for this when planning your closing costs.
Is CMHC Insurance Worth It?
- Buy a home with just 5% down instead of saving for 20%
- Insured mortgages typically get the lowest interest rates (often 0.20–0.50% below conventional)
- Allows you to enter the market years earlier — and benefit from any appreciation
- Insurance carries forward when you renew or switch lenders
- The premium is added to your mortgage — you pay interest on it for up to 25 years
- Provincial PST (Ontario, Quebec, Saskatchewan) must be paid in cash at closing
- On a 5%-down mortgage, the 4% premium can add ~$10,000+ to your total cost
- It protects the lender, not you — you still face foreclosure if you default
Related guides
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