CMHC Mortgage Insurance Explained: Premiums, Rules and Who Needs It

Short answer: Mortgage default insurance is required when your down payment is under 20%. It protects the lender, not you. The premium is 2.80% to 4.00% of the mortgage depending on your down payment, is usually added to the mortgage, and in Alberta has no sales tax. Insured mortgages are available on homes under $1,500,000, with up to a 25 year amortization, or 30 years for first time buyers and new builds.

What Is Mortgage Default Insurance?

Insurance that covers the lender if a borrower defaults. It’s what allows Canadians to buy with as little as 5% down. It’s provided by CMHC, Sagen and Canada Guaranty, which is why brokers often say “insured mortgage” rather than “CMHC”.

When Is It Required?

When your down payment is less than 20% of the purchase price, on homes priced under $1,500,000.

Premium Rates

Example: a $500,000 home with 5% down ($25,000) means a $475,000 mortgage. The premium is 4.00% = $19,000, added to the mortgage for a total of $494,000.

A 30 year amortization on an insured mortgage adds a small surcharge to the premium.

Rules to Know

• Price cap: insured mortgages are available on homes under $1,500,000
• Amortization: up to 25 years, or 30 years for first time buyers and new builds
• Stress test: you must qualify at the higher of 5.25% or your rate plus 2%
• Owner occupied: generally for homes you’ll live in (some 2 to 4 unit properties qualify)

Is There an Upside?

Insured mortgages often get lower interest rates than uninsured ones because the lender’s risk is lower. For some buyers, the rate difference offsets part of the premium.

How We Help

We show you the premium, total mortgage and payment at different down payments so you can decide how much to put down. Try our closing cost calculator or book a call.

Frequently asked questions

How much is CMHC insurance?

The premium is a percentage of the mortgage: 4.00% with 5% to 9.99% down, 3.10% with 10% to 14.99% down, and 2.80% with 15% to 19.99% down. It's usually added to the mortgage. Choosing a 30 year amortization adds a small surcharge.

Do I pay PST on CMHC insurance in Alberta?

No. Provincial sales tax on the premium applies in Ontario, Quebec and Saskatchewan, not Alberta.

This article is general information, not personal financial advice. Rates, rules and programs change. Talk to a licensed mortgage broker about your situation. Lacroix Mortgage Group is licensed and powered by Mortgage Connection Inc.