What Is CMHC Mortgage Insurance and How Much Does It Cost?

If you're buying a home in Canada with less than 20% down, you'll almost certainly pay for mortgage default insurance — often called CMHC insurance. It's what makes a 5% down payment possible, but it adds a real cost to your mortgage. This guide explains exactly what it is, the premium rates you'll pay, and how to estimate your own bill.

Key takeaways

• CMHC insurance protects the lender — not you — and is mandatory on any mortgage with less than 20% down.
• The premium is a percentage of your mortgage: 4.00% at 5%–9.99% down, 3.10% at 10%–14.99%, and 2.80% at 15%–19.99%.
• Put 20% or more down and no insurance is required at all.
• The premium is usually added to your mortgage, but in Ontario the 8% PST on it is paid in cash at closing.
• You can only insure a mortgage on a home priced under $1.5 million.

What is CMHC mortgage insurance?

Mortgage default insurance protects the lender if a borrower stops making payments. In Canada it's provided by the Canada Mortgage and Housing Corporation (CMHC) and two private insurers. Because it lowers the lender's risk, it's what allows banks to approve mortgages with down payments as low as 5%.

It protects the lender, not you

This is the most common misconception. You pay the premium, but the coverage protects your lender. The benefit to you is access — without it, you'd need a full 20% down payment to qualify.

Insurance is mandatory whenever your down payment is under 20% of the purchase price. These are called high-ratio mortgages. At 20% down or more, you have a conventional mortgage and pay no premium at all.

How much does it cost?

The premium is calculated as a percentage of your mortgage amount (not the purchase price). The smaller your down payment, the higher the rate — because the lender is taking on more risk.

As the chart shows, increasing your down payment from 5% to 15% on a $500,000 home cuts the premium by roughly $7,000. Run your own numbers with the HOMEH CMHC calculator.

How and when you pay it

The premium itself is almost always added to your mortgage and paid off gradually over your amortization, alongside the rest of your loan. You don't write a cheque for it up front.

The PST is a closing cost

In Ontario, the 8% provincial sales tax (PST) on the insurance premium cannot be added to the mortgage — it's due in cash on closing day. On a $19,000 premium that's about $1,520. Factor it into your closing costs budget.

So while the bulk of the premium is financed, you still need a little extra cash at closing. Estimate the full picture with the closing cost calculator.

When you don't need it (and the new rules)

You avoid the premium entirely with a down payment of 20% or more. But there are also limits on when insurance is even available:

• Homes priced at $1.5 million or more cannot be insured — you must put down at least 20%.
• As of December 15, 2024, the insured mortgage cap rose to $1.5M, and 30-year amortizations are now allowed for first-time buyers and buyers of new builds.
• Insurance is for owner-occupied or eligible rental purchases — rules vary by property type.

Deciding between a smaller down payment now versus saving longer for 20%? Our guides on how much down payment you need and how to save for a down payment walk through the trade-offs.

How HOMEH helps

CMHC premiums are set by the insurer — you can't negotiate them. But you can offset the cost elsewhere. HOMEH gives eligible buyers and sellers cashback that can more than cover an insurance premium, and our free calculators let you plan every number before you buy. Start with the CMHC calculator, then check the bigger picture with the first-time home buyer guide for Ontario.

Cashback that can cover your premium

Eligible HOMEH buyers receive the industry's highest Cashback Rebate — often enough to offset your CMHC premium and PST several times over. See what you qualify for at HOMEH cashback.

Not sure a mortgage with default insurance is right for you? Our mortgages cluster, including how mortgages work in Canada, can help you decide.