Put down less than 20% on a Canadian home and mortgage default insurance isn't optional — it's mandatory by law. What surprises a lot of first-time buyers is what the insurance actually protects: not the homeowner, but the lender, in case the borrower defaults. You pay the premium; the lender gets the coverage.
How the Premium is Priced
CMHC (along with the two private insurers, Sagen and Canada Guaranty, who price identically) sets premiums as a percentage of the loan amount, tiered by loan-to-value (LTV) — how much you're borrowing relative to the purchase price.
| Down Payment | LTV | Premium Rate |
|---|---|---|
| 5% | 95% | 4.00% |
| 10% | 90% | 3.10% |
| 15% | 85% | 2.80% |
| 20%+ | 80% or less | Not required |
The lower your down payment, the higher the percentage — and it's applied to a larger loan balance at the same time, so the gap between tiers compounds fast.
Worked Example
A $700,000 home with a 10% down payment ($70,000):
| Item | Amount |
|---|---|
| Purchase price | $700,000 |
| Down payment (10%) | $70,000 |
| Loan-to-value | 90% |
| Premium rate | 3.10% |
| Insured loan amount | $630,000 |
| CMHC Premium | $19,530 |
That premium is typically added to your mortgage principal rather than paid in cash, which means you're also paying interest on it for the life of the loan — the $19,530 above can grow to roughly $30,000+ in total cost once compounded over a 25-year amortization at a typical rate.
Common Mistakes
Buyers often calculate their down payment as a flat percentage of the full price and are surprised the legal minimum is higher once the home crosses $500,000 — the tiered rule catches people specifically in the $500,000-$1,000,000 range.
Buyers also forget that in Ontario, Quebec, and Saskatchewan, provincial sales tax applies to the CMHC premium itself — and unlike the premium, that tax cannot be rolled into the mortgage. It's due in cash at closing.
A third mistake: assuming a 30-year amortization is free. It's available to first-time buyers and buyers of new builds, but it adds a 0.20% surcharge on top of the standard premium rate.
Where This Calculator Has Limits
It doesn't account for the portability credit, which can reduce or eliminate the premium on a subsequent insured purchase if you're porting an existing insured mortgage within a certain window. It also can't apply the Eco program discount (up to 25% off) for energy-efficient homes without that qualification being confirmed separately.
Frequently Asked Questions
Can I avoid CMHC insurance without 20% down?
Not on an insured mortgage — it's legally required below 20% down for homes under the $1.5 million cap. Above that price, insured mortgages aren't available at all, and 20% down is required regardless.
Does a higher premium mean a worse mortgage rate?
Not necessarily — insured mortgages often qualify for better rate pricing than uninsured ones, since the lender's risk is covered. The rate savings can partially offset the premium cost over the life of the loan.
Is the premium refundable if I pay off the mortgage early?
No — it's a one-time charge for the life of that specific insured loan, not a recurring or refundable policy.
Do all three insurers (CMHC, Sagen, Canada Guaranty) charge the same rate?
Yes — pricing is standardized across all three; your lender selects which insurer underwrites your specific file.
Can I add extra down payment later to get a refund?
No — the premium is fixed at the LTV tier that applied when the mortgage was insured; increasing equity afterward doesn't trigger a refund.
Related Tools
Mortgage Calculator · Affordability Calculator · GDS/TDS Ratio Calculator
Educational content, not financial advice. CMHC premium rates, price caps, and provincial tax rules change periodically — confirm current figures with a licensed Canadian mortgage lender. Written by the MortgagePro Global team.