What is CMHC mortgage insurance?
CMHC mortgage insurance — formally called mortgage default insurance — is a form of protection required by Canadian law when a home buyer makes a down payment of less than 20% of the purchase price. The insurance protects the lender (not the borrower) in the event of default. It is provided by three approved insurers in Canada: the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), and Canada Guaranty.
Despite being called "insurance," the premium is paid entirely by the borrower. The premium is calculated as a percentage of the insured loan amount and is added directly to the mortgage balance — not paid upfront in cash. This means a borrower with CMHC insurance carries a slightly larger loan from day one.
When is CMHC insurance required?
CMHC insurance is required in Canada when all three of the following conditions are met:
- The purchase price is below $1,500,000 (homes at or above this price are not eligible for insured mortgages)
- The down payment is between 5% and 19.99% of the purchase price
- The mortgage is issued by a federally regulated lender (major banks, most credit unions)
If your down payment is 20% or more, or the home costs $1,500,000 or more, CMHC insurance does not apply and is not available. These mortgages are called "uninsured" or "conventional" mortgages.
CMHC premium rates 2026
The CMHC premium is calculated based on the loan-to-value (LTV) ratio — the mortgage amount as a percentage of the purchase price. The lower your down payment, the higher the premium rate. As of 2026, the premium schedule is:
| Down payment | LTV ratio | Premium rate | Example: $600k home |
|---|---|---|---|
| 5% ($30,000) | 95% | 4.00% | $22,800 added to mortgage |
| 10% ($60,000) | 90% | 3.10% | $16,740 added to mortgage |
| 15% ($90,000) | 85% | 2.80% | $14,280 added to mortgage |
| 19.99% ($119,940) | ~80% | 2.80% | $13,441 added to mortgage |
| 20% or more | 80% or less | 0% | No CMHC required |
How CMHC insurance is calculated — a worked example
Here is a complete example for a $700,000 home with a 10% down payment:
- Purchase price: $700,000
- Down payment: $70,000 (10%)
- Base loan amount: $700,000 − $70,000 = $630,000
- CMHC premium rate: 3.10% (10–14.99% down payment tier)
- CMHC premium amount: $630,000 × 3.10% = $19,530
- Total insured mortgage balance: $630,000 + $19,530 = $649,530
Your monthly payment is calculated on $649,530 — not $630,000. At 4.20% over 25 years, this increases the monthly payment by approximately $105 compared to a non-insured mortgage on the base loan amount. The CMHC premium also increases the total interest paid over the amortization period.
The true cost of CMHC insurance
The premium added to your mortgage compounds over the amortization period. For the example above — $19,530 in CMHC premium at 4.20% over 25 years — the total cost including compound interest is approximately $31,000. This is the real cost of CMHC: not the $19,530 upfront figure, but the compounded interest paid on that $19,530 over the full term.
This is why many financial advisors recommend putting as close to 20% down as possible to avoid CMHC entirely. However, the calculus is not always clear-cut: if building to 20% down requires renting for an additional 2–3 years in a rising market, the CMHC premium may cost less than the home appreciation you would miss during that time.
CMHC and the OSFI stress test
For insured mortgages (below 20% down), the OSFI stress test still applies. Additionally, insured mortgages carry a maximum amortization period of 25 years — compared to 30 years available for uninsured mortgages. The combination of a higher qualifying rate (stress test) and shorter maximum amortization makes the affordability calculation more restrictive for buyers with smaller down payments.
Use the CalcHomeRate mortgage payment calculator to model the exact impact of CMHC insurance on your monthly payment and total interest cost for your specific purchase price, down payment, and rate.
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