CMHC Mortgage Insurance Canada — The Complete Guide

What is CMHC Mortgage Insurance?

CMHC mortgage insurance — formally called mortgage default insurance — is not life insurance, disability insurance, or any form of protection for the borrower. It is insurance that protects the lender against the financial loss if you, the borrower, default on your mortgage and the property sells for less than what is owed. Every premium dollar you pay protects your bank, not you.

This distinction matters: paying CMHC insurance does not give you any rights, protections, or benefits. If you default, CMHC pays your lender — and then pursues you for the full amount. The premium is simply the cost of accessing the housing market with less than 20% down, mandated by the National Housing Act and administered by three approved providers:

The existence of mortgage default insurance in Canada is what makes the 5% down payment possible in the first place. Without it, most regulated lenders would require 20–25% down to protect themselves against default risk. CMHC transfers that risk to the Crown corporation, allowing lenders to offer high-ratio mortgages with confidence. The system has worked as intended: Canadian lender losses on defaulted insured mortgages are extremely low compared to international benchmarks.

From a borrower's perspective, CMHC insurance is a tax on insufficiency — it costs you money to buy before you have saved 20% down. Whether that cost is worth it depends on your market, your timeline, and your opportunity cost. The analysis that follows will help you make that decision with accurate numbers.

Who Needs CMHC Insurance?

CMHC insurance is required when all of the following conditions are met:

Two important edge cases worth knowing: First, if you are purchasing a second property as a rental while your principal residence mortgage is still outstanding, CMHC does not apply to the rental purchase the same way — standard insured mortgages require owner-occupancy. Second, the $1,500,000 limit was updated from $1,000,000 as of December 2024, expanding CMHC eligibility to higher-priced homes in expensive markets. This change was specifically designed to help buyers in Toronto and Vancouver, where entry-level detached homes frequently exceed the old $1,000,000 threshold.

CMHC Premium Rates — The Full Table

CMHC premium rates have been stable since 2017. They are calculated as a percentage of your mortgage amount (not the home price), and the rate is determined by your loan-to-value ratio at the time of purchase:

The premium is added directly to your mortgage balance. It is not a cash cost at closing — but it increases the mortgage you carry and the interest you pay over 25 years. The exception is the provincial sales tax on the premium: in Ontario (8%), Quebec (9.975%), Manitoba (7%), and Saskatchewan (6%), you must pay PST on the CMHC premium in cash at closing. This cannot be added to the mortgage.

One strategic insight: going from 9.99% down to 10% down drops your premium rate from 4.00% to 3.10% — a 0.9 percentage point reduction. On a $500,000 mortgage, this is $4,500 in premium savings from a single dollar of additional down payment crossing the threshold. If you are close to a premium tier boundary (10%, 15%, or 20%), it is almost always worth finding the extra funds to cross it. Discuss this with your broker before finalizing your down payment amount.

How Much Does CMHC Insurance Cost? — Real Scenarios

The following table shows the real cost of CMHC insurance across typical Canadian purchase prices, comparing 5% and 10% down:

*Monthly payments approximate at 4.89%, 25-year amortization, semi-annual compounding.

The $600,000 comparison (5% vs 10% down) is instructive: doubling your down payment from $30,000 to $60,000 — an additional $30,000 saved — reduces the CMHC premium by $6,060, lowers your total mortgage by $36,060, and saves $204/month in payments. Over 25 years, the 10% down scenario saves approximately $61,200 in total payments compared to 5% down, on top of the reduced premium.

It is worth understanding the full lifetime cost of the premium. A $22,800 CMHC premium added to a mortgage at 4.89% over 25 years costs approximately $40,200 in total repayments — nearly twice the headline premium amount. The premium is not just $22,800; it is $22,800 that grows with interest for 25 years. This is the number that should inform your decision about whether to wait for a larger down payment.

The 20% Down Decision — Should You Wait?

The decision to buy now with CMHC insurance versus waiting to save 20% down is one of the most consequential financial decisions Canadian first-time buyers face. There is no universally correct answer — it depends on your market, your savings rate, and property price expectations. Here is how to think about it clearly.

The case for buying now with CMHC:Property markets in Canada's largest cities have historically appreciated faster than the cost of CMHC insurance. On a $600,000 home, the CMHC premium is $22,800. If the home appreciates 5% per year while you save for 20% down, it gains $30,000 in value in year one alone — more than the entire insurance premium. Meanwhile, you continue paying rent during the waiting period. Every month of rent paid is a sunk cost, unlike a mortgage payment which builds equity.

The case for waiting for 20%: The $22,800 premium on a $600,000 home is real money. Combined with the higher monthly payments and interest on the larger insured mortgage, the total cost of going in at 5% versus 20% is substantial. In flat or declining markets, paying $22,800 in CMHC premium for a property that does not appreciate — or declines — is a poor outcome. Waiting also gives you more financial stability at closing: with 20% down and no CMHC premium, your monthly payments are lower and your cash flow more resilient.

The honest answer: in high-appreciation markets like Toronto and Vancouver, buying sooner with CMHC insurance has historically been the better financial outcome. In slower-moving markets, or when you can save the extra 10–15% quickly, waiting often makes sense. Run the numbers specific to your market and your savings rate, and make the decision based on data rather than anxiety or impatience.

Insured vs Insurable vs Uninsured Mortgages — Why This Affects Your Rate

There are three categories of Canadian mortgages, and understanding the difference is critical because it directly affects the interest rate you will be offered — sometimes in a counterintuitive way:

The practical implication: choosing a 30-year amortization to lower your monthly payment moves your mortgage from insurable to uninsured — adding a rate premium that may cost more over time than the cash flow benefit of the longer amortization. Increasing your purchase price above $1,500,000 similarly pushes you into the uninsured category. These thresholds are worth being aware of when structuring your purchase. A broker can model the net rate impact of crossing these boundaries for your specific situation.

CMHC Portability — Keep Your Insurance When You Move

One of the least-known benefits of paying CMHC insurance is that the coverage is portable. When you sell your current home and buy a new one within 90 days, you can transfer your existing CMHC insurance to the new mortgage — rather than paying a fresh premium on the full new mortgage amount.

Here is how portability works: if you originally paid CMHC insurance on a $380,000 mortgage and now buy a new home requiring a $450,000 mortgage, you only pay the CMHC premium on the $70,000 increase (the "top-up" amount) rather than on the full $450,000. The top-up is calculated at the premium rate applicable to the new mortgage's LTV. This can result in significant premium savings for homeowners who are moving up in the market.

Portability requires selling and buying within 90 days of each other. The mortgage must be with the same insurer (though different lenders are fine). If you take more than 90 days between transactions, portability is lost and you pay fresh premiums. When planning your move, synchronize your sale and purchase timelines to stay within the 90-day window. A real estate lawyer and your broker can help coordinate this.

Getting the CMHC Premium Refunded — Green Home Program

CMHC offers a 25% premium refund through its Energy-Efficient Refund program for borrowers who purchase or build a home that meets CMHC's energy-efficiency criteria. This is one of the few ways to partially recover the CMHC premium after the fact.

Qualifying homes must meet one of the following standards: be ENERGY STAR certified, be built to R-2000 standards, achieve a minimum EnerGuide rating, or meet specific requirements under provincial energy efficiency programs. New construction is most commonly eligible — particularly homes built to current energy code standards in provinces with updated building codes.

On a $22,800 CMHC premium, a 25% refund returns $5,700 — a meaningful sum. The refund is applied as a reduction of your outstanding insured mortgage balance, not as a cash payment. The process involves submitting documentation through your lender within 24 months of closing. Ask your builder or real estate agent specifically whether a property qualifies, and raise this with your broker at the time of purchase.

Beyond the premium refund, energy-efficient homes often qualify for lower utility costs, provincial rebates, and in some cases more favourable mortgage terms from lenders who have green mortgage programs. If you are purchasing new construction, the cumulative value of energy-efficiency incentives — CMHC refund, provincial rebates, lower operating costs — can be substantial. Factor them into your total cost of ownership calculation.

Frequently Asked Questions