If your down payment is less than 20%, CMHC insurance isn't optional — it's mandatory. Here's what it actually means for you.
What Is CMHC Mortgage Insurance?
CMHC (Canada Mortgage and Housing Corporation) mortgage insurance — officially called mortgage default insurance — is a premium paid to protect the lender, not you, if you default on your mortgage.
Three providers offer it in Canada: CMHC, Sagen, and Canada Guaranty. Your lender chooses which provider to use.
When Is It Required?
CMHC insurance is required when:
- Your down payment is less than 20% of the purchase price
- The purchase price is $1,500,000 or less (increased from $1,000,000 in December 2024)
It is not available (meaning you must put 20%+ down) if:
- The purchase price exceeds $1,500,000
- The amortization period exceeds 25 years (except for first-time buyers on new builds)
How Much Does It Cost?
The premium is based on your loan-to-value (LTV) ratio:
| Down Payment | LTV Ratio | Premium Rate | |-------------|-----------|-------------| | 5% | 95% | 4.00% | | 10% | 90% | 3.10% | | 15% | 85% | 2.80% | | 19.99% | 80% | 2.40% | | 20%+ | 80% or less | None |
Example: On a $600,000 purchase with 5% down ($30,000):
- Mortgage = $570,000
- CMHC premium = $570,000 × 4.00% = $22,800
- Total insured mortgage = $592,800
The premium is added to your mortgage — you don't pay it upfront (though you can if you choose). It's also subject to PST in Ontario and Quebec.
The $1.5M Rule Change (December 2024)
Before December 2024, CMHC insurance was only available on homes priced at $1,000,000 or less. The government raised this limit to $1,500,000, allowing buyers with less than 20% down to purchase homes up to $1.5M with an insured mortgage.
This opened up access to high-cost markets (Toronto, Vancouver) for buyers who don't have a full 20% saved.
30-Year Amortization (2024 Change)
Since August 2024, first-time home buyers purchasing a newly built home can amortize an insured mortgage up to 30 years (up from 25). This reduces your monthly payment but increases total interest paid over the life of the mortgage.
Can I Avoid CMHC?
Yes — if you can put 20% or more as a down payment, CMHC insurance is not required. Options to reach 20%:
- Save longer
- Use the FHSA (First Home Savings Account) — tax-deductible savings up to $40,000 lifetime
- Use the RRSP Home Buyers' Plan — withdraw up to $60,000 tax-free
- Accept a gift from immediate family members
Use Our CMHC Calculator
Calculate your exact CMHC premium with our CMHC Insurance Calculator.
Questions about your down payment options? Let's talk.