CMHC Mortgage Insurance Explained: Costs and Rules for 2026

What CMHC mortgage insurance actually is

CMHC mortgage insurance protects the lender, not you. When you buy a home in Canada with a down payment of less than 20%, federal rules require mortgage default insurance, most often through the Canada Mortgage and Housing Corporation (CMHC) or a private insurer such as Sagen or Canada Guaranty. If you ever stopped paying and the lender lost money after selling the home, the insurer covers the shortfall. You pay the premium, but the protection goes to the bank. The trade-off is that this insurance is what allows Canadians to buy with as little as 5% down instead of needing a full 20%.

Who needs it and the down payment rules

The minimum down payment in Canada is 5% on the first $500,000 of the purchase price and 10% on any portion above $500,000. Homes priced at $1.5 million or more cannot be insured at all, so they require at least 20% down. Any time your down payment is below 20% of the price, default insurance is mandatory. Once you reach 20% or more, the insurance is not required and you avoid the premium entirely.

How much CMHC insurance costs

The premium is a percentage of your mortgage amount and it rises as your down payment shrinks. As a rough guide, a down payment of 5% to 9.99% carries the highest premium, around 4% of the loan, while 10% to 14.99% down is around 3.1%, and 15% to 19.99% down is around 2.8%. On a $400,000 mortgage, a 4% premium is roughly $16,000. The premium is almost always added to your mortgage balance and paid off gradually over your amortization rather than upfront, so it increases your monthly payment slightly. The one part you do pay upfront is provincial sales tax on the premium, which applies in Ontario, Quebec, Saskatchewan, and Manitoba and cannot be added to the loan.

How to avoid paying it

There are only a few ways to avoid default insurance. The cleanest is to put down 20% or more. Some buyers borrow from family, use the federal Home Buyers' Plan to draw from an RRSP, or wait and save longer to cross the 20% threshold. It is worth running the numbers both ways, because a slightly smaller home with 20% down can sometimes cost less per month than a pricier one with an insured mortgage once the premium is included.

Frequently asked questions

Is CMHC insurance the same as mortgage life insurance?

No. CMHC default insurance protects the lender if you default. Mortgage life insurance is an optional personal policy that pays off your mortgage if you die. They are completely different products and you should not confuse one for the other.

Can I get the premium back if I sell early?

Generally no. The premium is earned by the insurer once the mortgage is in place. In some cases a portion may be portable to a new mortgage if you move, so ask your lender before breaking or moving a mortgage.

Does a bigger down payment always save money?

Reaching 20% removes the premium, which is a clear saving. Below that, a larger down payment both reduces the loan and lowers the premium tier, so it saves on two fronts. The calculator on this site estimates the premium automatically when your down payment is under 20%.

Try it yourself: the Mortgage Payment Calculator on TrueNorthCalc is free with no sign-up.