CMHC Insurance Explained: What It Is, What It Costs, and How to Lower It

If you are buying a home in Canada with less than a 20% down payment, you will run into mortgage default insurance, often just called CMHC insurance. Here is how it works and what it costs.

Quick answer: the standard premium is between 2.80% and 4.00% of your mortgage amount, depending on how much you put down. The premiums below are the published rates as of October 2026. They are set by the insurers and can change, so we confirm them when you apply.

What Is CMHC Insurance?

CMHC (Canada Mortgage and Housing Corporation) mortgage default insurance protects the lender if a borrower stops making payments. Even though it protects the lender, you pay the premium.

Federally regulated lenders can't make a mortgage with less than 20% down unless it is insured. This is called a "high-ratio" mortgage.

Three insurers offer this product in Canada:

CMHC (a Crown corporation)
Sagen (formerly Genworth)
Canada Guaranty

CMHC and Sagen publish the same standard premium rates. Canada Guaranty's rates and programs can differ, and some situations carry different pricing at any insurer, such as a borrowed down payment (CMHC charges 4.50% in that case) or a self-employed program. Your lender chooses the insurer.

How Much Does It Cost?

The premium is a percentage of your mortgage amount (not the purchase price), and the rate depends on your loan-to-value (LTV) ratio:

Down Payment	LTV Ratio	Standard Insurance Premium
5% to 9.99%	90.01% to 95%	4.00% of mortgage
10% to 14.99%	85.01% to 90%	3.10% of mortgage
15% to 19.99%	80.01% to 85%	2.80% of mortgage
20%+	80% or less	No default insurance required

The minimum down payment is 5% of the first $500,000 of the price plus 10% of the portion above $500,000. On a $600,000 home that is $35,000, which is about 5.8%.

Example

This is a hypothetical example, not a quote. Assumptions: a $600,000 purchase, the minimum down payment, a 25-year amortization, and a 5.25% fixed rate compounded semi-annually, which is how Canadian fixed mortgages are calculated.

Purchase price: $600,000
Minimum down payment: $35,000 (5% of the first $500,000 plus 10% of the next $100,000)
Mortgage amount: $565,000
Insurance premium: $565,000 × 4.00% = $22,600

Your total mortgage becomes $587,600. The premium is usually added to the mortgage and paid off over your amortization, so you do not pay it upfront. In Ontario, 8% provincial sales tax on the premium ($1,808 here) is the exception. You pay it at closing, and it can't be added to the mortgage.

At these assumptions, the $22,600 premium adds about $135 per month to your payment. The total payment on $587,600 would be about $3,502 a month, before property tax, heat and condo fees. Your actual rate and payment will differ.

The Rules

Insured mortgages have specific requirements:

Maximum amortization: 25 years, or 30 years if at least one buyer is a first-time buyer or the home is a new build (since December 15, 2024). A 30-year amortization adds 0.20% to the premium.
Maximum purchase price: under $1,500,000. Homes at $1.5M or more need at least 20% down.
Credit score: CMHC and Sagen each require at least one borrower to have a score of 600 on an insured purchase. Many lenders set their own minimum above that, commonly in the 640 to 650 range, so the insurer's minimum is a floor and not a promise of approval. Only one borrower has to meet the insurer's minimum, though some lenders look at the higher-income borrower first. Lenders also look at the whole credit file, including payment history and recent late payments. Our post on what lenders look for goes through it.
Owner-occupied: one to four units qualify if you live in one of them. Rental and investment properties need at least 20% down.
Stress test: you must qualify at the greater of your contract rate plus 2% or 5.25%.
Debt ratios: your housing costs can't be more than 39% of gross household income (GDS), and total debts can't be more than 44% (TDS).

Ways to Lower the Insurance Cost

1. Increase Your Down Payment to the Next Tier

If you are at 9% down, getting to 10% drops your premium rate from 4.00% to 3.10%. Here is a hypothetical example on a $500,000 home, using a 25-year amortization and a 5.25% rate:

At 9% down: $455,000 × 4.00% = $18,200
At 10% down: $450,000 × 3.10% = $13,950
Premium difference: $4,250

That is not free money. You put in $5,000 more cash, the Ontario sales tax paid at closing drops from $1,456 to $1,116, and the monthly payment is about $55 lower ($2,820 versus $2,765, both including the premium). Whether the extra $5,000 is worth it depends on your situation.

2. Use the FHSA and the Home Buyers' Plan Together

The First Home Savings Account (up to $8,000 a year, $40,000 lifetime) can be combined with the Home Buyers' Plan (up to $60,000 from your RRSP, per person) to build your down payment from tax-advantaged accounts. The CRA sets the rules for both, and they change from time to time, so check the current limits before you plan around them.

3. Accept a Gift

A relative can gift you funds for the down payment. Lenders require a signed gift letter confirming no repayment is expected, and proof the money is in your account.

4. Save to 20%

If you can get to 20% down, you avoid default insurance entirely. The trade-off is time: you may be saving while home prices move. That is a personal call, and it depends on your income, your rent and how fast you can save.

5. Ask About Energy-Efficient Homes

CMHC offers a partial premium refund of 25% through its Eco Products for buying or building an energy-efficient home, or making qualifying improvements. Ask us whether a particular home might qualify.

Is CMHC Insurance Bad?

It is a cost, and it also makes buying possible earlier. Without default insurance, many buyers would have to save 20% first, which in expensive markets can take years.

The useful question is what the premium costs you in your own numbers, and whether buying now with a smaller down payment beats waiting. Sometimes buying sooner makes sense even after paying the premium, and sometimes waiting does. It depends on your savings, your income and the price you are looking at.

Check Your Numbers

Use our mortgage calculator to see how insurance affects a specific purchase, including the premium amount, the monthly payment impact and the total cost over the mortgage. If you are buying your first home in Simcoe County, our first-time buyer guide for Barrie covers the down payment, closing costs and rebates.

Talk to us about your down payment options →

All examples are hypothetical and for illustration only. Rates, rules and eligibility change and vary by lender and insurer, and approval depends on your full application.

Sources

Checked October 2026.