Mortgage default insurance — commonly called CMHC insurance, after Canada Mortgage and Housing Corporation, its largest provider — protects the lender, not the buyer, if a borrower defaults on a mortgage with less than 20% down. It's mandatory in Canada any time a buyer puts down less than 20%, and it directly affects both what you can afford and what type of property you can buy with a smaller down payment.
When Is Mortgage Insurance Required?
Mortgage default insurance is mandatory for any purchase where the down payment is less than 20% of the purchase price — commonly called a "high-ratio" mortgage. Put down 20% or more, and you have a "conventional" mortgage, which doesn't require this insurance at all.
The $1.5 Million Price Cap
Mortgage default insurance is only available on properties priced up to $1,500,000 — a threshold raised from the previous $1,000,000 cap. Above $1.5 million, insured financing isn't available at any down payment level, meaning a buyer must put down at least 20% regardless of how much more than 20% they might otherwise choose to put down.
Minimum Down Payment Rules
For a home priced up to $500,000, the minimum down payment is 5%. For the portion of the price between $500,000 and $1.5 million, the minimum rises to 10% on that portion. Above $1.5 million, as noted, insurance isn't available and a full 20% minimum applies to the entire price.
Premium Rates
The insurance premium is calculated as a percentage of your mortgage amount and is typically added to your mortgage balance rather than paid upfront, based on your loan-to-value (LTV) ratio:
| Down payment | Loan-to-value | Typical premium |
|---|---|---|
| 5% | 95% | ~4.0% of the mortgage amount |
| 10% | 90% | ~3.1% of the mortgage amount |
| 15% | 85% | ~2.8% of the mortgage amount |
An extended amortization beyond 25 years typically adds a surcharge on top of the standard premium. These figures are indicative and can change — confirm the exact current premium with your lender or mortgage broker before finalizing your financing.
Who Pays For It, and Who Benefits?
The buyer pays the premium, but the insurance itself protects the lender if the buyer defaults — it doesn't protect the buyer's equity or provide any direct benefit to them beyond making a low-down-payment mortgage possible in the first place. This distinction surprises some first-time buyers, who sometimes assume the insurance protects them personally.
FAQ
Do I need CMHC insurance if I put down 20%?
No — mortgage default insurance is only required when your down payment is less than 20% of the purchase price.
Can I get an insured mortgage on a home over $1.5 million?
No — mortgage default insurance isn't available above a $1.5 million purchase price at any down payment level; a minimum 20% down payment is required regardless.
Who actually benefits from CMHC insurance — me or the lender?
The lender. The insurance protects them if you default; it doesn't protect your equity or provide a direct benefit to you as the buyer, even though you pay the premium.
Is CMHC the only mortgage default insurer in Canada?
No — Sagen and Canada Guaranty are the other two private mortgage default insurers operating alongside CMHC, a Crown corporation.
How is the premium usually paid?
It's typically added to your mortgage principal and paid off over your amortization period, rather than paid as a separate upfront cost at closing.
Ready to see what fits your budget? Browse current GTA homes for sale on Condohill, or see how mortgage pre-approval works.
Sources
Premium rates and price cap per CMHC. This is general information, not financial advice — confirm current rates and eligibility with a licensed mortgage professional.