What is CMHC mortgage loan insurance?
CMHC mortgage loan insurance is a type of mortgage default insurance offered by the Canada Mortgage and Housing Corporation. It is required when a homebuyer makes a down payment of less than 20% of the home's purchase price, for homes priced at $1.5 million or less. The insurance protects the lender, not the buyer, if the borrower stops paying the mortgage. This protection enables lenders to offer mortgages with lower down payments, making homeownership more accessible.
Because the insurance protects the lender, you might be required to pay the premium even though you are not the one directly insured. The premium is a one-time cost, but it can be paid upfront or added to your mortgage amount. When added to the mortgage, it increases the total loan balance, which means your monthly payments will be higher.
When is CMHC insurance required?
You generally need CMHC insurance when your down payment is less than 20% of the purchase price. The exact down payment requirement depends on the home's price:
For homes up to $500,000, the minimum down payment is 5%. For homes between $500,000 and $1,499,999, you need 5% on the first $500,000 and 10% on any amount above that. CMHC insurance is not available for homes priced over $1.5 million; in that case, a minimum down payment of 20% is required.
- Down payment less than 20%: insurance required
- Home price $500,000 or less: minimum down payment 5%
- Home price over $1.5 million: not eligible for CMHC insurance, 20% down required
How CMHC insurance premiums are calculated
CMHC charges a premium based on the size of your down payment, specifically your loan-to-value (LTV) ratio. A smaller down payment results in a higher premium rate. Premium rates range from 0.6% to 4.5% of the total mortgage amount.
The premium rate is a percentage of your loan amount. This premium can be paid in full at closing or added to your mortgage balance. The exact premium amounts are based on the official CMHC rate schedule, which is available on their website.
CMHC premium rate table
The table below shows the CMHC premium rates for homeowner loans with traditional down payments. Rates vary by loan-to-value ratio, which is the percentage of the home price financed by the mortgage.
| Loan-to-value ratio | Premium rate |
|---|---|
| Up to 65% | 0.60% |
| 65.01%–75% | 1.70% |
| 75.01%–80% | 2.40% |
| 80.01%–85% | 2.80% |
| 85.01%–90% | 3.10% |
| 90.01%–95% | 4.00% |
| 90.01%–95% (with non-traditional down payment) | 4.50% |
How to add CMHC insurance to a mortgage payment calculation
When using a mortgage payment calculator, you can include CMHC insurance in two main ways:
If you pay the premium in full at purchase, it does not affect your monthly payments. However, if you add the premium to your mortgage amount, the total loan balance increases. This means your monthly payment will be higher than if you had not rolled the premium into the mortgage. The exact impact on your monthly payment depends on your interest rate and amortization period.
For Canadians with a TD mortgage calculator, a practical approach is to first estimate your mortgage amount without insurance, then add the premium to the principal and recalculate the monthly payment. To get the most accurate estimate, you can use the official CMHC mortgage calculator, which automatically includes premiums for down payments under 20%.
Alternatives to CMHC: Sagen and Canada Guaranty
While this guide focuses on CMHC, private mortgage default insurers also operate in Canada. Mortgage default insurance terms vary by provider, so if you are comparing options, you should review each provider's documents directly.
Impact of CMHC insurance on total mortgage cost
Adding CMHC insurance to your mortgage increases the total amount you owe and therefore increases your monthly payments. Over the life of the mortgage, you will also pay more interest because the premium is financed at the same interest rate, but the specific dollar impact depends on your loan amount, interest rate, and amortization period.
To see how much CMHC insurance adds to your specific situation, use the CMHC mortgage calculator, which automatically includes the premium for down payments under 20% for homes priced below $1.5 million.
Frequently asked questions
Does CMHC insurance protect the buyer or the lender?
CMHC mortgage loan insurance protects the lender, not the buyer. If you stop making mortgage payments, the insurance pays the lender for a portion of the loss. This protection is what allows lenders to offer mortgages with down payments of less than 20%.
Sources: Canada Mortgage and Housing Corporation (CMHC)Can I avoid CMHC insurance by putting down 20%?
Yes. CMHC mortgage loan insurance is required only when you make a down payment of less than 20% of the home's purchase price, for homes priced at $1.5 million or less. If you put down 20% or more, you do not need mortgage default insurance.
Sources: Canada Mortgage and Housing Corporation (CMHC)How does CMHC insurance affect my monthly payment?
When the CMHC premium is added to your mortgage amount, it increases your total loan balance. A larger loan balance means higher monthly payments, because you are paying off a bigger principal over the same amortization period.
Sources: Canada Mortgage and Housing Corporation (CMHC)Can I roll CMHC insurance into my mortgage?
Yes. You can pay the CMHC mortgage loan insurance premium in full at the time of purchase, or you can add it to your mortgage amount. If you add it, your mortgage balance increases, and you will pay for the premium over time as part of your monthly payments.
Sources: Canada Mortgage and Housing Corporation (CMHC)Sources
- CMHC Mortgage Loan Insurance Explained | CMHC — Canada Mortgage and Housing Corporation (CMHC)
- CMHC Mortgage Loan Insurance Cost | CMHC — Canada Mortgage and Housing Corporation (CMHC)
- What is CMHC Mortgage Loan Insurance? — Canada Mortgage and Housing Corporation (CMHC)
- Mortgage Loan Insurance: Premium Information for Homeowner and Small Rental Loans — Canada Mortgage and Housing Corporation (CMHC)
- Mortgage payment calculator | Estimate monthly payments | CMHC — Canada Mortgage and Housing Corporation (CMHC)