Is CMHC insurance mandatory?

Yes, if you are buying with less than 20% down on a home priced under $1,500,000 in Canada, default insurance is mandatory under the Bank Act and National Housing Act . You may choose between CMHC (the Crown corporation), Sagen (formerly Genworth Canada), or Canada Guaranty, but the premium rates and rules are identical across all three. Above $1,500,000 or with 20%+ down, insurance is not available or required.

How is the CMHC premium calculated?

The premium is a percentage of the insured loan amount (purchase price minus down payment). The CMHC premium tiers are: at 5–9.99% down the rate is 4.00%; at 10–14.99% it is 3.10%; at 15–19.99% it is 2.80%. On an $800,000 home with 5% down ($40,000), the insured loan is $760,000 and the premium is $760,000 × 4% = $30,400, added to the principal, making the total mortgage $790,400.

Does CMHC insurance protect me?

No. Despite the word "insurance," CMHC default insurance protects the lender, not the buyer. If you default and the lender suffers a loss on the forced sale, CMHC pays out the lender and then pursues you for repayment. You gain no protection from it — you simply pay for it as the condition of access to a high-ratio mortgage.

What is the provincial sales tax on CMHC premiums?

Ontario, Quebec, Saskatchewan, and Manitoba charge provincial sales tax on the CMHC premium. This PST must be paid in cash at closing — it cannot be added to the mortgage. In Ontario the rate is 8%, so on a $30,400 premium the PST is $2,432, due at closing. In Quebec the rate is 9%; in Saskatchewan and Manitoba it is 6%.

Can I avoid CMHC insurance?

Yes: put 20% or more down, or buy a home priced at $1,500,000 or more (where insured mortgages are not available regardless of down payment). If you are a first-time buyer or purchasing a newly built home, you may amortize up to 30 years with default insurance; conventional (uninsured) mortgages are capped at 25 years by most lenders. Saving to 20% down eliminates the premium but requires more upfront cash.

CMHC insurance

CMHC mortgage default insurance is mandatory in Canada when your down payment is less than 20%. The one-time premium ranges from 2.8% to 4.0% of the insured loan and is normally added to your mortgage principal. Learn the tiers, calculations, and how to avoid it.

Updated August 2026

Definition

CMHC mortgage default insurance is a one-time premium charged to Canadian homebuyers who purchase with less than 20% down. The premium — ranging from 2.80% to 4.00% of the insured loan — is normally added to the mortgage principal and amortized over the life of the loan. It protects the lender if you default; you pay for it as the price of accessing a high-ratio mortgage at institutional rates.

Canada only

Premium tiers by down payment

Three down-payment bands determine your premium rate. Bars animate upward — taller bar means higher premium. Crossing 20% eliminates insurance entirely.

Real numbers: $600,000 home in Ontario

5% down

Down payment: $30,000
Insured loan: $570,000
Premium (4.0%): $22,800
Total mortgage: $592,800
Ontario PST (8%): $1,824 cash

10% down

Down payment: $60,000
Insured loan: $540,000
Premium (3.1%): $16,740
Total mortgage: $556,740
Ontario PST (8%): $1,339 cash

15% down

Down payment: $90,000
Insured loan: $510,000
Premium (2.8%): $14,280
Total mortgage: $524,280
Ontario PST (8%): $1,142 cash

20% down

Down payment: $120,000
Insured loan: —
Premium: $0
Total mortgage: $480,000
PST: $0

Key insight: Going from 5% to 20% down on a $600,000 home saves $22,800 in premiums plus $1,824 in PST — but requires $90,000 more upfront cash. The premium on 5% down adds roughly $118/month to a 25-year payment at 5%.

How CMHC insurance affects your monthly payment

Premium is added to the principal

The CMHC premium is added to the mortgage balance before calculating your payment. A $570,000 loan with a $22,800 premium becomes a $592,800 mortgage. At 5% over 25 years, the premium adds roughly $118/month — you pay it off gradually over the full amortization.

PST must be paid in cash

In Ontario, Quebec, Saskatchewan, and Manitoba, the provincial sales tax on the premium cannot be rolled into the mortgage. Budget for it separately alongside your other closing costs — it can be $1,000–$3,000 depending on the purchase price and province.

Stress test applies to insured mortgages

All insured mortgages in Canada must pass the mortgage stress test — you qualify at the higher of your contract rate + 2% or the 5.25% benchmark. The insured mortgage including the CMHC premium is the amount used for the qualifying calculation.

Frequently asked questions

Is CMHC insurance mandatory?: Yes, if you are buying with less than 20% down on a home priced under $1,500,000 in Canada, default insurance is mandatory under the Bank Act and National Housing Act. You may choose between CMHC (the Crown corporation), Sagen (formerly Genworth Canada), or Canada Guaranty, but the premium rates and rules are identical across all three. Above $1,500,000 or with 20%+ down, insurance is not available or required.
How is the CMHC premium calculated?: The premium is a percentage of the insured loan amount (purchase price minus down payment). The CMHC premium tiers are: at 5–9.99% down the rate is 4.00%; at 10–14.99% it is 3.10%; at 15–19.99% it is 2.80%. On an $800,000 home with 5% down ($40,000), the insured loan is $760,000 and the premium is $760,000 × 4% = $30,400, added to the principal, making the total mortgage $790,400.
Does CMHC insurance protect me?: No. Despite the word "insurance," CMHC default insurance protects the lender, not the buyer. If you default and the lender suffers a loss on the forced sale, CMHC pays out the lender and then pursues you for repayment. You gain no protection from it — you simply pay for it as the condition of access to a high-ratio mortgage.
What is the provincial sales tax on CMHC premiums?: Ontario, Quebec, Saskatchewan, and Manitoba charge provincial sales tax on the CMHC premium. This PST must be paid in cash at closing — it cannot be added to the mortgage. In Ontario the rate is 8%, so on a $30,400 premium the PST is $2,432, due at closing. In Quebec the rate is 9%; in Saskatchewan and Manitoba it is 6%.
Can I avoid CMHC insurance?: Yes: put 20% or more down, or buy a home priced at $1,500,000 or more (where insured mortgages are not available regardless of down payment). If you are a first-time buyer or purchasing a newly built home, you may amortize up to 30 years with default insurance; conventional (uninsured) mortgages are capped at 25 years by most lenders. Saving to 20% down eliminates the premium but requires more upfront cash.

Try the calculator & explore related terms

Calculators

Canadian mortgage calculator — CMHC premium is calculated automatically
US mortgage calculator — see PMI, the US equivalent

Related glossary terms

Down payment — reaching 20% eliminates the premium
Stress test — Canadian qualifying rule for insured mortgages
Amortization — how the premium-inflated principal pays down
Closing costs — where PST on the premium fits
PMI — the US equivalent for <20% down