What is CMHC Insurance?
CMHC (Canada Mortgage and Housing Corporation) insurance—also called mortgage default insurance—protects lenders if you stop making payments. Despite protecting the lender, you pay for it.
When Do You Need It?
You need CMHC insurance if your down payment is less than 20% of the home's purchase price. This applies to all insured mortgages in Canada.
How Much Does It Cost?
CMHC premiums are based on your loan-to-value ratio:
| Down Payment | Premium Rate |
|---|---|
| 5% - 9.99% | 4.00% |
| 10% - 14.99% | 3.10% |
| 15% - 19.99% | 2.80% |
| 20%+ | Not required |
Example:
- Home price: $500,000
- Down payment: $25,000 (5%)
- Mortgage: $475,000
- CMHC premium: $475,000 × 4.00% = $19,000
This $19,000 is added to your mortgage, so you'd actually borrow $494,000.
The Silver Lining
While CMHC insurance adds to your costs, it also allows you to:
- Buy a home with as little as 5% down
- Access lower interest rates (insured mortgages are less risky for lenders)
- Enter the market sooner rather than waiting years to save 20%
How to Minimize Your Premium
1. Save a larger down payment - Even getting to 10% saves you 0.9% on the premium 2. Buy a less expensive home - Lower purchase price = lower premium 3. Use gifted funds - Family gifts can boost your down payment
Calculate Your Exact Premium
Use our CMHC calculator to see exactly what you'll pay based on your specific situation.