CMHC Mortgage Insurance in Canada: Complete Guide
Mortgage default insurance — colloquially "CMHC insurance" after the largest provider, the Canada Mortgage and Housing Corporation — is the reason Canadians can buy a home with as little as 5% down. It protects the lender, but the borrower pays for it.
When does CMHC insurance apply?
You must purchase mortgage default insurance if your down payment is less than 20% of the home's purchase price. The insurance is mandatory — it's not optional and you don't shop for it directly. Your lender chooses the insurer (CMHC, Sagen, or Canada Guaranty) and rolls the premium into your loan.
The December 2024 rule changes
On December 15, 2024, the federal government raised the maximum insured mortgage from $1 million to $1.5 million. The key implications:
- Homes priced up to $1,499,999 can now qualify for CMHC insurance — meaning you can buy them with less than 20% down.
- The down-payment tiers remain: 5% on the first $500,000, 10% on the portion between $500,000 and $1.5M, and 20% above.
- 30-year amortizations are now allowed for first-time buyers purchasing newly built homes.
Premium tiers
The CMHC premium is calculated as a percentage of the insured loan amount, based on your loan-to-value (LTV) ratio:
| LTV | Premium |
|---|---|
| 80.01% – 85.00% | 2.80% |
| 85.01% – 90.00% | 3.10% |
| 90.01% – 95.00% | 4.00% |
Above 95% LTV, the loan isn't insurable at all. At exactly 80% (a 20% down payment), no insurance is needed.
Worked example: $500k home, 5% down
- Purchase price: $500,000
- Down payment: $25,000 (5%)
- Insured loan: $475,000
- LTV: 95% → premium tier 4.00%
- CMHC premium: $19,000
- Final mortgage principal: $494,000
Don't forget provincial PST
In three provinces, the CMHC premium is subject to provincial sales tax — and that PST is paid upfront at closing, not financed:
- Ontario: 8% of the premium
- Quebec: 9% of the premium
- Saskatchewan: 6% of the premium
In our $19,000 example, an Ontario buyer would owe an additional $1,520 in PST at closing. Budget for it.
Can I avoid CMHC insurance?
The simplest way is to put 20% or more down. For first-time buyers without that kind of savings, the alternatives are limited: a co-signer, gifted down payment funds, a no-frills mortgage with stricter terms, or a vendor take-back arrangement.
Is CMHC insurance worth it?
For people who would otherwise rent for years longer waiting to save 20%, CMHC insurance is often a net positive — accumulated equity and home appreciation tend to outweigh the premium cost. Run the numbers in our calculator with and without insurance to see what makes sense for you.
