What Is CMHC Mortgage Default Insurance? (2026 Guide)

If you're buying with less than 20% down, you'll run into "CMHC insurance" — and it's one of the most misunderstood costs in Canadian home buying. It doesn't protect you, yet you're the one who pays for it. At the same time, it's the very thing that makes low-down-payment homeownership possible for hundreds of thousands of Canadians every year. Here's exactly what mortgage default insurance is, when it's required, how the premium is calculated, who actually benefits, and how to decide whether to avoid it — current as of 2026.

The short answer

Mortgage default insurance — commonly called "CMHC insurance," though it's also offered by Sagen and Canada Guaranty — is required by law when your down payment is under 20% on a home priced up to $1.5 million. It protects the lender if you ever default, but it lets you buy years sooner with as little as 5% down. The premium is a percentage of your mortgage amount (roughly 0.6% to 4.0% depending on your down payment), it's added to your loan and paid off over your amortization, and it rises as your down payment shrinks. In most provinces the premium itself is financed; in Ontario, BC, Quebec, Saskatchewan and Manitoba the provincial sales tax on the premium is due in cash at closing. Estimate your premium with the CMHC calculator or ask Maya for a quick read on your situation.

What is mortgage default insurance?

Mortgage default insurance is a one-time insurance product that covers a lender's losses if a borrower stops making payments and the home is sold for less than the outstanding balance. It exists because lending someone 90% or 95% of a property's value is riskier than lending 65%. Rather than refuse those loans outright, lenders require them to be insured. That insurance is what allows a federally regulated lender to issue a "high-ratio" mortgage at competitive rates.

It is not life insurance, mortgage protection insurance, or anything that pays out to you or your family. If you lose your job or fall behind, default insurance does nothing for you — it reimburses the lender. That distinction trips up many first-time buyers, so it's worth saying plainly: you pay for it, the lender benefits from it.

When is CMHC insurance required?

• Down payment under 20% on an owner-occupied home priced up to $1.5 million — insurance is mandatory. This is a "high-ratio" mortgage.
• Down payment of 20% or more — not required. You have a "conventional" or low-ratio mortgage.
• Homes priced over $1.5 million — cannot be insured at all, so the minimum down payment jumps to 20%.
• Rental properties that are non-owner-occupied generally aren't eligible for standard default insurance — see financing a rental property.
• Amortizations over 25 years are restricted; longer amortizations (such as the 30-year option for first-time buyers and new builds) carry a premium surcharge.

The minimum down payment itself is tiered: 5% on the first $500,000 of price and 10% on the portion from $500,000 to $1.5 million. Full tiers are in how much down payment you need in Canada, and you can model scenarios with the down payment calculator.

How the premium is calculated

The premium is a percentage of your mortgage amount (not the purchase price), and it climbs as your loan-to-value (LTV) ratio rises — meaning the smaller your down payment, the higher the rate. The table below shows illustrative premium rates by down payment for a standard 25-year amortization. These figures are illustrative for explanation only — confirm current rates with the CMHC calculator before relying on them.

*Illustrative only. A common surcharge (roughly 0.20%) applies when the amortization exceeds 25 years. Confirm live figures before budgeting.

How the premium is paid

In almost every case the premium is added to your mortgage balance and paid off gradually over your amortization, rather than written as a cheque at closing. That keeps your upfront cash low, but it means you pay interest on the premium for the life of the loan — a real, if modest, long-run cost.

The exception is the provincial sales tax (PST) on the premium. In Ontario, BC, Quebec, Saskatchewan and Manitoba, the tax on the premium cannot be financed and must be paid in cash at closing. On a typical purchase that's a few thousand dollars, so build it into your closing budget alongside land transfer tax and legal fees — see closing costs in Ontario.

The three default insurers

Three providers underwrite default insurance in Canada, and from a borrower's standpoint they are largely interchangeable — your lender chooses which one to use, and premium rates are effectively the same across all three:

• CMHC (Canada Mortgage and Housing Corporation) — the federal Crown corporation; the name most people use generically.
• Sagen — Canada's largest private mortgage insurer (formerly Genworth Canada).
• Canada Guaranty — the other private insurer, Canadian-owned.

The differences are in niche underwriting guidelines and specific programs, not in the price you pay. For a full breakdown, see the sibling article CMHC vs Sagen vs Canada Guaranty.

Who benefits — and the pros and cons

The insurer pays out to the lender, never to you. So why is it often a good deal for buyers? Because an insured mortgage is lower-risk for the lender, insured high-ratio mortgages frequently qualify for better rates than uninsured mortgages at the same down payment. You're effectively trading a one-time premium for years of earlier equity-building and, often, a sharper rate.

• Pros: buy with as little as 5% down; start building equity sooner; access to competitive insured rates; the premium is spread over the amortization.
• Cons: the premium increases your loan balance and the interest you pay; PST is due in cash at closing; it protects the lender, not you; it can't be avoided below 20% down.

A worked example

Illustrative figures only. Suppose Priya is a first-time home buyer purchasing a $600,000 condo in Mississauga with 5% down:

• Purchase price: $600,000
• Minimum down payment: 5% on first $500,000 ($25,000) + 10% on next $100,000 ($10,000) = $35,000
• Mortgage before premium: $565,000
• Premium at ~4.00% (95% LTV): ~$22,600, added to the mortgage
• Total mortgage: ~$587,600
• Ontario PST on premium (8%): ~$1,808, due in cash at closing

So Priya gets into the market with $35,000 down plus roughly $1,808 of PST at closing, and the $22,600 premium rides on her mortgage. Run your own numbers in the CMHC insurance calculator.

Should you avoid it?

Putting 20% down avoids the premium entirely and reduces what you borrow — but waiting several years to save 20% while prices and rent keep climbing isn't automatically the smarter move. For many buyers, paying the premium to get in with 5–10% down and starting to build equity now beats waiting. It's a genuine trade-off that depends on your market, your savings rate, and your timeline. A broker can model both paths side by side.

Frequently asked questions

What is CMHC mortgage insurance?

It's mortgage default insurance, required when you put down less than 20% on a home priced up to $1.5 million. It protects the lender against losses if you default, and in exchange it lets you buy with as little as 5% down.

Who pays for CMHC insurance — and who does it protect?

The borrower pays the premium, but it protects the lender. Your benefit is access to a low-down-payment mortgage, usually at a competitive insured rate.

How much is the premium?

Roughly 0.6% to 4.0% of your mortgage amount, rising as your down payment falls. It's usually added to the loan and paid over the amortization; in several provinces the PST on it is due in cash at closing. The CMHC calculator gives your exact figure.

Is it the same with CMHC, Sagen, or Canada Guaranty?

For pricing, yes — the three insurers charge effectively the same premiums. Your lender picks which one underwrites your file. See CMHC vs Sagen vs Canada Guaranty for the nuances.

Can I get default insurance on a home over $1.5 million?

No. Homes above $1.5 million can't be insured, so you'll need at least 20% down on that purchase.

How do I avoid paying CMHC insurance?

Put down 20% or more so you have a conventional mortgage. Whether that's worth waiting for depends on your market and savings rate — often buying sooner with the premium builds more equity than waiting to hit 20%.

Buying with less than 20% down? Talk to our team, ask Maya, or estimate your premium — we'll show whether paying it to buy now beats waiting to save 20%.