What is mortgage default insurance in Canada?

Mortgage default insurance (also called CMHC insurance or mortgage insurance) protects the lender — not you — if you default on your mortgage. It is mandatory when your down payment is less than 20% of the purchase price. The premium ranges from 2.8% to 4.0% of the mortgage amount and is added to your mortgage balance. Three insurers provide this coverage in Canada: CMHC (Canada Mortgage and Housing Corporation), Sagen (formerly Genworth), and Canada Guaranty.

How much does CMHC insurance cost?

CMHC insurance premiums depend on your loan-to-value ratio. With 5% down (95% LTV), the premium is 4.0% of the mortgage. With 10% down (90% LTV), it is 3.10%. With 15% down (85% LTV), it is 2.80%. On a $500,000 home with 5% down, the insurance premium is $19,000, added to your mortgage balance — making your total mortgage $494,000 ($475,000 + $19,000).

Can I avoid paying mortgage default insurance?

Yes — put at least 20% down. With a 20% or larger down payment, mortgage default insurance is not required. However, even with 20% down, some lenders may require "low-ratio" insurance for certain borrowers (self-employed, rental properties, etc.). Note that insured mortgages often qualify for lower interest rates, so the cost of insurance may be partially offset.

Is mortgage default insurance the same as mortgage life insurance?

No, they are completely different. Mortgage default insurance (CMHC insurance) protects the lender if you default — it is mandatory with less than 20% down. Mortgage life insurance pays off your mortgage if you die — it is optional coverage sold by banks. Default insurance is a one-time premium added to your mortgage. Life insurance is a monthly premium added to your payment.

Can I get a refund on mortgage default insurance if I sell or refinance?

Partial refunds are available in limited situations. If you port your insured mortgage to a new property, the insurance transfers with it. If you sell within the first few years, CMHC does not refund the premium. If you refinance to a conventional (uninsured) mortgage, you do not get a refund. The insurance premium is generally non-refundable once paid, though the insurance transfers if you switch lenders during the mortgage term (the new lender inherits the insurance).

Do all three insurers charge the same premiums?

Yes. CMHC, Sagen, and Canada Guaranty all use the same premium rate schedule. The premium at 95% LTV is 4.0%, at 90% LTV is 3.10%, and at 85% LTV is 2.80% — identical across all three. The differences are in policy details, property type restrictions, and lender relationships. Your lender chooses which insurer to use — you generally do not have a choice.

Mortgage Default Insurance in Canada: CMHC, Sagen & Canada Guaranty Compared (2026)

If your down payment is less than 20%, mortgage default insurance is mandatory in Canada. It adds thousands to your mortgage — but it also makes homeownership possible with as little as 5% down. Here is exactly how it works, what it costs, and how the three insurers compare.

How mortgage default insurance works

Component	Details
Purpose	Protects the lender (not you) if you default
When required	Down payment less than 20%
Premium range	2.80%–4.00% of mortgage amount
How it’s paid	Added to your mortgage balance (increases your mortgage amount)
PST applicable	Yes — in Ontario (8%), Quebec (9%), Manitoba (7%), Saskatchewan (6%) — paid upfront at closing
Who chooses the insurer	Your lender — you do not select
Maximum purchase price	$1,000,000 (insured mortgages cannot exceed this)
Maximum amortization	25 years (insured mortgages; 30-year amortization allowed for first-time buyers on new builds as of 2024 changes)

Premium rates (all three insurers)

Down Payment	Loan-to-Value (LTV)	Insurance Premium (% of mortgage)
5% (minimum on first $500K)	95.01%–95%	4.00%
10%	90.01%–95%	3.10%
15%	85.01%–90%	2.80%
20%+	80% or less	Not required

Premium calculation examples

Home Price	Down Payment	Down %	Mortgage	Premium Rate	Insurance Premium	Total Mortgage
$400,000	$20,000	5%	$380,000	4.00%	$15,200	$395,200
$500,000	$25,000	5%	$475,000	4.00%	$19,000	$494,000
$500,000	$50,000	10%	$450,000	3.10%	$13,950	$463,950
$500,000	$75,000	15%	$425,000	2.80%	$11,900	$436,900
$700,000	$45,000	~6.4%	$655,000	4.00%	$26,200	$681,200
$1,000,000	$75,000	7.5%	$925,000	4.00%	$37,000	$962,000

Note on purchases above $500,000: The minimum down payment is 5% on the first $500,000 and 10% on the portion above $500,000.

Down payment calculation for homes above $500,000

Home Price	Minimum Down Payment	Calculation
$500,000	$25,000	5% × $500,000
$600,000	$35,000	(5% × $500,000) + (10% × $100,000)
$700,000	$45,000	(5% × $500,000) + (10% × $200,000)
$800,000	$55,000	(5% × $500,000) + (10% × $300,000)
$999,999	$74,999	(5% × $500,000) + (10% × $499,999)
$1,000,000	$200,000	20% required — cannot be insured

PST on mortgage default insurance

In some provinces, you must pay PST on the insurance premium at closing — in cash, not added to the mortgage.

Province	PST Rate	PST on $19,000 Premium (5% down, $500K home)
Ontario	8%	$1,520
Quebec	9%	$1,710
Manitoba	7%	$1,330
Saskatchewan	6%	$1,140
BC	Exempt	$0
Alberta	No PST	$0
Atlantic provinces	Exempt	$0

This is an additional closing cost many buyers forget. In Ontario, buying a $500,000 home with 5% down means you owe $1,520 in PST at closing on top of your other costs.

CMHC vs Sagen vs Canada Guaranty

Feature	CMHC	Sagen	Canada Guaranty
Government entity	Crown corporation	Private (publicly traded)	Private
Market share	~50%	~30%	~20%
Premium rates	Standard schedule	Same schedule	Same schedule
Max purchase price	$1,000,000	$1,000,000	$1,000,000
Max amortization (standard)	25 years	25 years	25 years
Self-employed borrowers	Available (may require more documentation)	Available	Available
New-to-Canada program	Yes	Yes	Yes
Non-traditional credit	Limited	Some flexibility	Some flexibility
Rental properties	Available (different premiums)	Available	Available
Extended amortization (30-year, first-time + new build)	Available (2024 change)	Available	Available

Why lenders choose one insurer over another

You do not pick the insurer — your lender does. Lenders consider:

Factor	Details
Risk appetite	CMHC is more conservative; Sagen and Canada Guaranty may approve files CMHC declines
Relationship	Lenders have bulk insurance agreements with specific insurers
Property type	Some insurers are more flexible with certain property types
Borrower profile	Self-employed, new-to-Canada, or non-traditional borrowers may be steered to a specific insurer

Practical impact: If your mortgage application is declined by one insurer, your broker can submit to another. This is one advantage of using a mortgage broker — they have access to all three.

Insured vs insurable vs uninsurable mortgages

Category	Insurance Status	Down Payment	Max Amortization	Rate Impact
Insured	Default insurance required and premium paid by borrower	Less than 20%	25 years (30 for qualifying FTBs)	Lowest rates
Insurable	Lender obtains portfolio insurance (you don’t pay premium)	20%+	25 years	Middle rates
Uninsurable	Cannot be insured by any insurer	20%+	Up to 30 years	Highest rates

Why insured mortgages get lower rates

Reason	Details
Zero risk for lender	If you default, the insurer pays the lender in full
Lower capital requirements	Banks need less reserve capital against insured mortgages
Securitization	Insured mortgages can be bundled and sold as Canada Mortgage Bonds
Rate benefit	Insured borrowers often get 0.10–0.20% lower rates than uninsured

The 20% paradox

Putting exactly 20% down sometimes results in a higher interest rate than putting 19.99% down and paying insurance. The insurance gives you access to insured rates that can offset the premium cost.

Scenario	Down Payment	Insurance Premium	Rate	Monthly Payment	5-Year Cost
20% down (uninsured)	$100,000 on $500K	$0	4.50%	$2,220	$133,200
19.99% down (insured)	$99,950 on $500K	~$11,200	4.30%	$2,216	$132,960 + insurance

The math is close — in some rate environments, paying insurance to get a lower rate actually saves money over 5 years. Ask your broker to run both scenarios.

Common situations and rules

Porting insurance when you move

Detail	Rule
Moving to a new home	Insurance can be ported — transferred to the new mortgage
Increasing mortgage amount	Top-up insurance may be required on the additional amount
Switching lenders	Insurance transfers with the mortgage when you switch at renewal

Refinancing

Detail	Rule
Refinancing an insured mortgage	You lose the insurance — refinanced mortgages are uninsurable
Getting insurance back	Not possible — once you break the insured mortgage, it’s gone
Rate impact	You move to uninsurable rates (typically higher)

Self-employed borrowers

Insurer	Self-Employed Treatment
CMHC	Accepts traditional income verification; may accept stated income with 2 years’ business history
Sagen	Business-for-self program — may accept 1–2 years’ income documents
Canada Guaranty	Stated income program available in some cases

How to minimize insurance costs

Strategy	Details	Savings
Increase down payment to 10%	Premium drops from 4.0% to 3.10%	0.90% of mortgage (~$4,050 on $450K)
Increase down payment to 15%	Premium drops to 2.80%	1.20% of mortgage (~$5,100 on $425K)
Increase down payment to 20%	No insurance required	Full premium savings (~$15,000–$20,000)
Gifted down payment	Family gift to reach higher down payment tier	Varies
FHSA + RRSP HBP	Maximize tax-advantaged savings for larger down payment	Up to $75,000

Insurance premium impact on monthly payment

On a $500,000 home at 4.5% over 25 years:

Down Payment	Mortgage + Insurance	Monthly Payment	Premium Cost Over 25 Years
5% ($25,000)	$494,000	$2,742	$19,000 (+ ~$11,600 interest on it)
10% ($50,000)	$463,950	$2,575	$13,950 (+ ~$8,500 interest)
15% ($75,000)	$436,900	$2,425	$11,900 (+ ~$7,300 interest)
20% ($100,000)	$400,000	$2,220	$0

The true cost of insurance includes the interest you pay on the premium over the life of the mortgage. $19,000 in insurance premiums costs you ~$30,600 total over 25 years including interest.