What Is CMHC Mortgage Insurance?
Mortgage default insurance — commonly called CMHC insurance — is required by law when you purchase a home with a down payment of less than 20% of the purchase price. It protects the lender (not you) against the risk of default. Despite protecting the lender, the premium is paid by the borrower, either upfront or added to the mortgage balance.
Three providers offer mortgage default insurance in Canada: Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth), and Canada Guaranty. The premiums are identical across all three providers and are set by regulation. Lenders choose which insurer to work with, but the cost to you is the same regardless.
Current CMHC Insurance Premium Rates
The premium is calculated as a percentage of the mortgage amount (not the purchase price) and varies based on your loan-to-value ratio:
CMHC Insurance Premiums (2026)
Premium as a percentage of mortgage amount
| Down Payment | LTV Ratio | Premium | On $500K Mortgage |
|---|---|---|---|
| 5% | 95.01% | 4.00% | $20,000 |
| 10% | 90.01% – 95% | 3.10% | $15,500 |
| 15% | 85.01% – 90% | 2.80% | $14,000 |
| 20%+ | 80% or less | Not required | $0 |
How the Premium Is Paid
In most cases, the CMHC premium is added to your mortgage balance rather than paid upfront. This means you pay interest on the insurance premium over the life of your mortgage, increasing the true cost beyond the nominal premium amount.
For example, if your mortgage is $475,000 (5% down on a $500,000 home), the insurance premium at 4.00% is $19,000. Added to your mortgage, your total balance becomes $494,000. Over a 25-year amortization at 3.94%, the interest on the premium alone would add approximately $11,500 to your total cost — making the real cost of insurance closer to $30,500.
The 20% Down Payment Question
The instinct to put 20% down to avoid CMHC insurance is understandable, but it is not always the optimal financial decision. Here are the key considerations:
Arguments for 20% down
No insurance premium saves you thousands. A lower mortgage balance means lower monthly payments and less total interest. You also have more equity from day one, providing a buffer against market declines.
Arguments for less than 20% down
Insured mortgages often get the lowest available interest rates because the lender's risk is covered by the insurer. The rate difference can partially offset the insurance cost. Additionally, waiting years to save 20% in a rising market can mean paying significantly more for the same home.
The opportunity cost factor
If you have 15% saved and could buy now or wait another year to reach 20%, consider whether home prices might increase in that year. In markets like Vancouver, a single year of 5% price appreciation on a $800,000 home is $40,000 — far more than the insurance premium you would avoid.
Rules and Eligibility Requirements
CMHC-insured mortgages come with specific rules that differ from conventional (uninsured) mortgages:
- Maximum purchase price of $1,500,000 for insured mortgages. Properties above this threshold require a minimum 20% down payment.
- Maximum amortization of 25 years for insured mortgages — though first-time buyers now qualify for 30-year insured amortization as of late 2024.
- The property must be owner-occupied. Investment properties and rental properties cannot be purchased with an insured mortgage.
- The borrower must pass the federal stress test, qualifying at the contract rate plus 2% or the benchmark rate, whichever is higher.
- Minimum credit score requirements vary by insurer but are generally 600 or higher for CMHC approval.
Can You Get a Refund on CMHC Insurance?
CMHC offers a partial premium refund if you port your insured mortgage to a new property, but only if certain conditions are met: you must move within the portability period (typically matching your mortgage term), the new property must also be owner-occupied, and the new mortgage amount cannot exceed the original.
If you refinance and your loan-to-value ratio drops below 80%, you do not get a refund on the original premium. The insurance stays attached to the original mortgage transaction. However, you will not need to pay a new premium on the refinanced amount as long as it does not exceed the original insured amount.
Key Takeaways
- CMHC insurance is required on down payments below 20% and protects the lender, not the borrower.
- Premiums range from 2.80% to 4.00% of the mortgage amount and are typically added to the mortgage balance.
- The true cost of CMHC insurance includes interest paid on the premium over the life of the mortgage.
- Putting 20% down is not always the best strategy — insured mortgages often get lower rates, and waiting to save more can cost more in a rising market.
- Maximum purchase price for insured mortgages is $1,500,000.
Calculate Your Mortgage Costs
See how CMHC insurance affects your monthly payment and total cost of homeownership with our mortgage calculator.
Free to use. No obligation. No credit check required.