On December 15, 2024, the federal government raised the insured mortgage purchase price cap from $1,000,000 to $1,500,000. This was the first increase since the $1M cap was introduced in 2012 and is one of the most significant Canadian mortgage policy changes in a decade. For buyers in Toronto, Vancouver, and other high-cost markets, it dramatically reduces the down payment required to buy a home above $1 million.
How the Insured Mortgage Cap Works
Mortgage default insurance (commonly called CMHC insurance, though Sagen and Canada Guaranty also provide it) is required on all mortgages where the down payment is less than 20%. It protects the lender against default, which allows them to offer lower interest rates. In exchange, the borrower pays an insurance premium.
The cap sets the maximum purchase price eligible for insurance. Below the cap, you can put down as little as 5%. Above the cap, you must put down at least 20% (making the mortgage “uninsured” or “conventional”).
Old vs New Cap
| Factor | Before Dec 15, 2024 | After Dec 15, 2024 |
|---|---|---|
| Maximum insured purchase price | $1,000,000 | $1,500,000 |
| Down payment for $1.1M home | 20% = $220,000 | As low as $85,000 |
| Down payment for $1.5M home | 20% = $300,000 | As low as $125,000 |
| Mortgage insurance required (under 20% down) | Yes | Yes |
| Stress test applies | Yes | Yes |
Down Payment Requirements Under the New Cap
Canada’s tiered down payment structure still applies:
| Purchase Price Portion | Minimum Down Payment |
|---|---|
| First $500,000 | 5% |
| $500,001 to $1,500,000 | 10% |
| Above $1,500,000 | 20% (no insurance available) |
Down Payment by Purchase Price
| Purchase Price | Minimum Down Payment | Down Payment % | Old Rules (20% Required Above $1M) | Savings | |—————|———————|—————-|————————————|———|| | $800,000 | $55,000 | 6.88% | $55,000 (was already insurable) | $0 | | $1,000,000 | $75,000 | 7.50% | $75,000 (was already insurable) | $0 | | $1,100,000 | $85,000 | 7.73% | $220,000 | $135,000 | | $1,200,000 | $95,000 | 7.92% | $240,000 | $145,000 | | $1,300,000 | $105,000 | 8.08% | $260,000 | $155,000 | | $1,400,000 | $115,000 | 8.21% | $280,000 | $165,000 | | $1,500,000 | $125,000 | 8.33% | $300,000 | $175,000 | | $1,500,001+ | 20% minimum | 20%+ | 20% | No change |
CMHC Insurance Premium Costs
The insurance premium is calculated as a percentage of the mortgage amount (purchase price minus down payment). The rate depends on the loan-to-value (LTV) ratio.
Premium Rate Schedule
| Loan-to-Value Ratio | Down Payment % | Premium (% of Mortgage Amount) |
|---|---|---|
| Up to 65% | 35%+ | 0.60% |
| 65.01% – 75% | 25%–34.99% | 1.70% |
| 75.01% – 80% | 20%–24.99% | 2.40% |
| 80.01% – 85% | 15%–19.99% | 2.80% |
| 85.01% – 90% | 10%–14.99% | 3.10% |
| 90.01% – 95% | 5%–9.99% | 4.00% |
Insurance Cost Examples
| Purchase Price | Down Payment | Mortgage | LTV | Premium Rate | Premium $ | Total Mortgage (incl. premium) |
|---|---|---|---|---|---|---|
| $1,100,000 | $85,000 (7.73%) | $1,015,000 | 92.27% | 4.00% | $40,600 | $1,055,600 |
| $1,200,000 | $95,000 (7.92%) | $1,105,000 | 92.08% | 4.00% | $44,200 | $1,149,200 |
| $1,300,000 | $105,000 (8.08%) | $1,195,000 | 91.92% | 4.00% | $47,800 | $1,242,800 |
| $1,300,000 | $195,000 (15%) | $1,105,000 | 85.00% | 2.80% | $30,940 | $1,135,940 |
| $1,400,000 | $115,000 (8.21%) | $1,285,000 | 91.79% | 4.00% | $51,400 | $1,336,400 |
| $1,500,000 | $125,000 (8.33%) | $1,375,000 | 91.67% | 4.00% | $55,000 | $1,430,000 |
| $1,500,000 | $225,000 (15%) | $1,275,000 | 85.00% | 2.80% | $35,700 | $1,310,700 |
Note: Some provinces charge PST on mortgage default insurance, which adds to the total cost.
The Real Cost: Lower Down Payment vs Higher Balance
Buying a $1.3 million home with the new minimum down payment saves $155,000 in required cash — but it comes with trade-offs.
Comparison: $1,300,000 Purchase
| Factor | New Rules (Insured) | Old Rules (Conventional) |
|---|---|---|
| Down payment | $105,000 | $260,000 |
| Mortgage amount | $1,195,000 | $1,040,000 |
| CMHC premium | $47,800 | $0 |
| Total mortgage | $1,242,800 | $1,040,000 |
| Monthly payment (4.50%, 25-yr) | $6,837 | $5,722 |
| Monthly payment (4.50%, 30-yr)* | $6,262 | $5,241 |
| Total interest (25-yr) | $808,300 | $676,600 |
| Extra cost over life of mortgage | +$179,500 | — |
*30-year amortization available if first-time buyer or new build under new amortization rules.
The $155,000 cash savings comes at a cost of approximately $179,500 in additional interest and insurance premiums over 25 years. However, the $155,000 in freed-up capital could be invested — at a 6% return over 25 years, $155,000 grows to approximately $665,000.
Who Benefits Most
Clear Winners
| Buyer Profile | Why They Benefit |
|---|---|
| First-time buyers in Toronto/Vancouver | Average detached home prices well above $1M; can now enter market with less cash |
| Upgraders in high-cost cities | Moving from a condo to a house above $1M no longer requires 20% on the full price |
| Buyers with high income but limited savings | Can qualify based on income without needing $200K+ in cash |
| Buyers who would otherwise borrow from family | Reduces the amount of gifted down payment needed |
Who Should Still Aim for 20% Down
| Situation | Why 20% Is Better |
|---|---|
| You have the savings | Avoid $40K–$55K in insurance premiums |
| Property is close to $1.5M | The premium is large relative to the down payment savings |
| You want the lowest possible rate | Insured rates are often lower, but the premium can offset the savings |
| You plan to refinance soon | Having more equity gives you better options |
Income Required to Qualify
Even with a lower down payment, you still need to pass the mortgage stress test. Here is the approximate income needed:
| Purchase Price | Down Payment | Mortgage (incl. insurance) | Rate | Qualifying Rate | Approx. Income Required |
|---|---|---|---|---|---|
| $1,100,000 | $85,000 | $1,055,600 | 4.50% | 6.50% | ~$195,000 |
| $1,200,000 | $95,000 | $1,149,200 | 4.50% | 6.50% | ~$212,000 |
| $1,300,000 | $105,000 | $1,242,800 | 4.50% | 6.50% | ~$230,000 |
| $1,400,000 | $115,000 | $1,336,400 | 4.50% | 6.50% | ~$247,000 |
| $1,500,000 | $125,000 | $1,430,000 | 4.50% | 6.50% | ~$264,000 |
Assumes 25-year amortization, $500/month other debts, GDS 39%, TDS 44%, and property taxes of 1% of purchase price annually. Use a mortgage qualification calculator for your specific numbers.
Impact on the Housing Market
Supply and Demand Effects
The cap increase effectively expands the pool of eligible buyers for homes priced $1M–$1.5M. This has potential implications:
| Effect | Direction | Magnitude |
|---|---|---|
| Demand for $1M–$1.5M homes | Increases | Moderate — limited by income requirements |
| Prices in the $1M–$1.5M segment | Upward pressure | Debated — some analysts expect 2%–5% price effect |
| Demand for $900K–$1M homes | May decrease slightly | Buyers who stretched for sub-$1M can now shop higher |
| Condo market | Mixed | Some condo buyers may pivot to townhouses in the $1M–$1.3M range |
Market Context
In 2024, the average home price in Toronto was approximately $1,065,000 and in Vancouver approximately $1,170,000. The previous $1M cap meant that buying an average-priced home in these cities required 20% down — a $200K+ barrier that excluded many qualified buyers based on income.
Frequently Overlooked Details
| Detail | What to Know |
|---|---|
| Insurance premium is added to your mortgage | Your actual mortgage is larger than the purchase price minus down payment |
| Some provinces charge PST on the premium | Ontario charges 8% PST on CMHC premiums — on a $47,800 premium, that is $3,824 extra |
| First-time buyer incentives still stack | FHSA, HBP, and first-time buyer tax credit apply regardless of insured vs uninsured |
| Rate differences: insured vs uninsured | Insured mortgages often get rates 5–15 basis points lower than uninsured |
| Portability | Insured mortgages are generally portable to a new property |