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🇨🇦 Canada guide5 min read

CMHC Mortgage Insurance: The Complete Canadian Guide

CMHC insurance is mandatory for most Canadian buyers with less than 20% down. Here's exactly how it works, what it costs, and whether it's worth saving longer to avoid it.

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Key takeaways

  • ✓CMHC insurance is required for all mortgages with less than 20% down
  • ✓Premium rates: 4.00% (5–9.99% down), 3.10% (10–14.99%), 2.80% (15–19.99%)
  • ✓The premium is added to your mortgage — you pay interest on it over the full amortization
  • ✓CMHC-insured mortgages cap at CA$1.5 million (as of December 2024)
  • ✓Saving to 20% is almost always worth it for properties above CA$700,000

What is CMHC insurance and who pays?

Mortgage default insurance (commonly called CMHC insurance) is required by law for all federally regulated lenders when the down payment is below 20% of the purchase price.

Despite protecting the lender against default, the borrower pays the premium. It is a one-time charge calculated as a percentage of the loan amount, almost always added to the mortgage balance rather than paid upfront.

CMHC is not the only provider — Sagen and Canada Guaranty also offer mortgage default insurance at the same OSFI-approved premium rates.

CMHC premium rates and real costs

Premium rates as of 2024: — 5.00–9.99% down: 4.00% of loan — 10.00–14.99% down: 3.10% of loan — 15.00–19.99% down: 2.80% of loan

On a CA$600,000 purchase with 5% down (CA$30,000): Loan: CA$570,000. Premium: CA$22,800. Added to loan: CA$592,800. Interest on premium at 5.5% over 25 years: ~CA$16,500. True total cost of CMHC: ~CA$39,300.

Saving from 5% to 20%: Requires saving an extra CA$90,000 but saves ~CA$39,300 in total CMHC costs — effectively a guaranteed return on your savings effort.

💡 Tip: Ontario, Quebec, Manitoba, and Saskatchewan also charge provincial sales tax (7–9%) on the CMHC premium. In Ontario, 8% PST on a CA$22,800 premium adds CA$1,824 that must be paid in cash at closing.

CMHC eligibility rules

Purchase price limit: CA$1,500,000 (increased from CA$1 million in December 2024 — enabling insured mortgages in higher-cost markets).

Property type: Owner-occupied properties only (1–4 units). Not available for pure investment properties.

Amortization: 30 years for first-time buyers purchasing new builds (as of August 2024). Standard insured mortgages are capped at 25 years.

Credit: Generally requires minimum 600 credit score.

Is it worth saving to 20%?

In flat or modest appreciation markets: Almost always worth saving to 20%. The certain CMHC cost is large; the opportunity cost of renting while saving is relatively modest.

In rapidly appreciating markets (Toronto, Vancouver): Less clear. If prices rise CA$50,000/year while you save the extra 10% over 2 years, the price appreciation may exceed the CMHC saving.

Use the Down Payment Calculator to model your specific timeline, then compare expected price appreciation against the certain CMHC saving.

Frequently Asked Questions

Calculators mentioned in this guide

Down Payment Savings Calculator

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Mortgage Payment Calculator

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Rent vs Buy Calculator

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Disclaimer: Calculations are estimates for informational purposes only and do not constitute financial advice. Mortgage rules, taxes, and CMHC insurance requirements vary by province. Consult a licensed mortgage broker before making financial decisions.