Mortgage default insurance (commonly called CMHC insurance) is required on all Canadian mortgages with less than 20% down. This guide provides the complete premium schedule, shows you exactly what you will pay, and covers the provincial sales tax that many buyers forget about.
CMHC premium schedule
The premium is a percentage of the mortgage amount (not the purchase price), and it depends on your down payment percentage:
| Down Payment % | Premium % | $400,000 Home | $500,000 Home | $600,000 Home | $750,000 Home |
|---|---|---|---|---|---|
| 5.00% | 4.00% | $15,200 | $19,000 | $22,800 | $28,500 |
| 5.01–9.99% | 4.00% | $15,200 | $19,000 | $22,800 | $28,500 |
| 10.00% | 3.10% | $11,160 | $13,950 | $16,740 | $20,925 |
| 10.01–14.99% | 3.10% | $11,160 | $13,950 | $16,740 | $20,925 |
| 15.00% | 2.80% | $9,520 | $11,900 | $14,280 | $17,850 |
| 15.01–19.99% | 2.40% | $7,680 | $9,600 | $11,520 | $14,400 |
| 20.00%+ | 0.00% | $0 | $0 | $0 | $0 |
Premium is calculated on the mortgage amount. Example: $500,000 home with 5% down = $475,000 mortgage × 4.00% = $19,000 premium.
How the premium is calculated step by step
Example: $550,000 home with 7.5% down payment
| Step | Calculation | Amount |
|---|---|---|
| Purchase price | $550,000 | |
| Down payment (7.5%) | $550,000 × 7.5% | $41,250 |
| Mortgage amount | $550,000 – $41,250 | $508,750 |
| Insurance premium (4.00%) | $508,750 × 4.00% | $20,350 |
| Total mortgage (with premium) | $508,750 + $20,350 | $529,100 |
| Monthly payment impact | Premium amortized over 25 years at 4.89% | +$117/month |
The $20,350 premium is added to your mortgage balance. You do not pay it out of pocket — it is financed over the life of the mortgage. This means you pay interest on the insurance premium as well.
Premium calculations for homes $500,000–$999,999
For homes between $500,000 and $999,999, the down payment calculation has two tiers:
- 5% on the first $500,000
- 10% on the portion above $500,000
| Purchase Price | Minimum Down Payment | Down Payment % | Mortgage Amount | Premium (4.00%) | Total Mortgage |
|---|---|---|---|---|---|
| $500,000 | $25,000 | 5.00% | $475,000 | $19,000 | $494,000 |
| $600,000 | $35,000 | 5.83% | $565,000 | $22,600 | $587,600 |
| $700,000 | $45,000 | 6.43% | $655,000 | $26,200 | $681,200 |
| $800,000 | $55,000 | 6.88% | $745,000 | $29,800 | $774,800 |
| $900,000 | $65,000 | 7.22% | $835,000 | $33,400 | $868,400 |
| $999,999 | $74,999 | 7.50% | $925,000 | $37,000 | $962,000 |
At $1,500,000 and above: Insurance is not available. You must put at least 20% down.
Provincial sales tax on CMHC premiums
Most people do not realize that some provinces charge sales tax on the mortgage insurance premium — and this must be paid upfront at closing, not added to the mortgage.
| Province | PST on CMHC Premium | Tax on $19,000 Premium | Paid |
|---|---|---|---|
| Ontario | 8% | $1,520 | At closing (cash) |
| Quebec | 9% | $1,710 | At closing (cash) |
| Saskatchewan | 6% | $1,140 | At closing (cash) |
| Manitoba | 7% | $1,330 | At closing (cash) |
| Alberta | 0% | $0 | — |
| British Columbia | 0% | $0 | — |
| Nova Scotia | 0% | $0 | — |
| New Brunswick | 0% | $0 | — |
| Newfoundland | 0% | $0 | — |
| PEI | 0% | $0 | — |
This catches many buyers off guard. On a $500,000 home with 5% down in Ontario, you need an extra $1,520 in cash at closing for the PST on the insurance premium — on top of all your other closing costs.
CMHC vs Sagen vs Canada Guaranty
Canada has three mortgage default insurers. Your lender chooses which one to use — you do not get to pick. Here is how they compare:
| Feature | CMHC | Sagen | Canada Guaranty |
|---|---|---|---|
| Premium schedule | 2.40–4.00% | 2.40–4.00% | 2.40–4.00% |
| Minimum credit score | 600 | 600 | 600 |
| Maximum amortization | 25 years | 25 years | 25 years |
| Maximum purchase price | $1,499,999 | $1,499,999 | $1,499,999 |
| Self-employed programs | Yes (with conditions) | Yes (with conditions) | Yes (with conditions) |
| Market share | ~50% | ~30% | ~20% |
Bottom line: The premiums and requirements are the same across all three. You will not save money by requesting a specific insurer.
The true cost of CMHC insurance (including interest)
Because the premium is added to your mortgage, you pay interest on it for the life of the loan. Here is the real cost:
| Scenario ($500K home, 5% down) | Amount |
|---|---|
| Insurance premium | $19,000 |
| Interest on $19,000 over 25 years (at 4.89%) | $13,460 |
| PST in Ontario (8%) | $1,520 |
| Total true cost of insurance | $33,980 |
The actual cost is nearly double the stated premium because you are financing it over 25 years.
Strategies to minimize CMHC insurance costs
Strategy 1: Increase your down payment to hit a lower premium tier
Each premium tier represents a significant savings threshold:
| Down Payment | Premium Rate | Premium on $500K Home | Savings vs 5% Down |
|---|---|---|---|
| 5% ($25,000) | 4.00% | $19,000 | — |
| 10% ($50,000) | 3.10% | $13,950 | $5,050 |
| 15% ($75,000) | 2.80% | $11,900 | $7,100 |
| 19.99% ($99,995) | 2.40% | $9,600 | $9,400 |
| 20% ($100,000) | 0.00% | $0 | $19,000 |
The jump from 5% to 10% down saves $5,050 in premiums — plus you borrow $25,000 less. Combined interest savings over 25 years: approximately $22,000.
Strategy 2: Use the FHSA and HBP to boost your down payment
| Source | Maximum | Tax Benefit |
|---|---|---|
| First Home Savings Account (FHSA) | $40,000 | Tax-deductible contributions + tax-free growth + tax-free withdrawal |
| Home Buyers’ Plan (HBP) | $60,000 per person ($120,000 per couple) | Tax-deferred RRSP withdrawal |
| Combined | $100,000 ($220,000 per couple) |
A couple using both the FHSA and HBP could access up to $220,000 for a down payment — potentially reaching the 20% threshold and avoiding insurance entirely.
Strategy 3: Wait vs buy now analysis
Sometimes it makes sense to keep saving for a larger down payment. Other times, waiting costs more in rising home prices than you save in insurance:
| Scenario | Buy Now (5% Down) | Wait 1 Year (10% Down) |
|---|---|---|
| Home price | $500,000 | $515,000 (3% appreciation) |
| Down payment | $25,000 | $51,500 |
| Mortgage amount | $475,000 | $463,500 |
| Insurance premium | $19,000 | $14,369 |
| Total mortgage (with premium) | $494,000 | $477,869 |
| Extra down payment needed | — | $26,500 |
| Insurance savings | — | $4,631 |
| But the home costs more | — | +$15,000 |
In this example, waiting saves $4,631 in insurance but the home costs $15,000 more. Buying now is the better financial decision — even with the higher premium.
The breakpoint: Waiting only makes financial sense if you can accumulate the extra down payment faster than home prices rise. In markets appreciating more than 3–4% per year, buying with insurance is usually better than waiting.
Insurance on different purchase scenarios
| Scenario | Purchase Price | Down Payment | Mortgage | Premium | Total Mortgage |
|---|---|---|---|---|---|
| First condo (starter) | $350,000 | $17,500 (5%) | $332,500 | $13,300 | $345,800 |
| Townhouse | $500,000 | $50,000 (10%) | $450,000 | $13,950 | $463,950 |
| Detached home | $700,000 | $45,000 (min) | $655,000 | $26,200 | $681,200 |
| Higher-end home | $999,999 | $74,999 (min) | $925,000 | $37,000 | $962,000 |
| Luxury home | $1,500,000 | $300,000 (20%) | $1,200,000 | $0 | $1,200,000 |
Frequently misunderstood rules
| Rule | Explanation |
|---|---|
| Insurance cannot be cancelled | Once on your mortgage, it stays for the life of the loan (or until you refinance with 20%+ equity) |
| Insurance does not protect YOU | It protects the lender if you default. You still lose your home and equity in a foreclosure. |
| Maximum amortization is 25 years | Insured mortgages are capped at 25-year amortization — no 30-year option |
| Refinances cannot be insured | Only purchases qualify for insurance. If you refinance, you need 20%+ equity. |
| Premium is on the mortgage, not purchase price | Common mistake — the 4.00% applies to what you borrow, not what the home costs |
| You pay interest on the premium | The premium is financed over the amortization, adding ~$100–$150/month on a typical premium |