Mortgage Insurance in Canada: CMHC and Your Down Payment (2026)

If you’re saving for your first home in Canada, you’ve probably heard the name “CMHC” thrown around — usually right next to words like “premium,” “default,” and a dollar figure that makes your stomach drop. Here’s the plain version: if your down payment is less than 20% of the home’s purchase price, federal law requires your mortgage to be insured — and you pay the bill for it.

It protects the lender, not you. Yes, really. Let’s walk through how it works, what it actually costs in 2026, and how to plan around it.

A note on numbers: premium tiers below are the verified 2026 schedules published by CMHC, Sagen, and Canada Guaranty. Insurers can change their schedules, so always confirm the current posted premium before you commit — this is a plan, not a quote.

What it is

Mortgage default insurance (commonly just called “CMHC insurance,” even though CMHC is one of three providers) covers your lender if you default on your mortgage — i.e., if you stop paying and they can’t recover the loan from selling the home. Because the lender’s risk is lower on an insured loan, lenders legally must insure high-ratio mortgages through an approved insurer.

Three companies provide it in Canada: CMHC (the federal Crown corporation), Sagen (formerly Genworth), and Canada Guaranty. You don’t get to pick — your lender chooses which insurer to use. All three publish nearly identical premium schedules, so the cost is effectively the same no matter which one your lender uses.

It’s required when all three of these are true:
1. Your down payment is less than 20% of the purchase price,
2. The home costs $1.5 million or less (see below), and
3. The home will be your principal residence.

What it is NOT: This is not life insurance, not mortgage protection insurance, and not anything that pays you or your family if something goes wrong. Those optional products protect your household; default insurance protects the bank. Don’t mix them up — an agent selling you “mortgage insurance” might mean the optional one.

How it works

The down payment rules

Canada’s minimum down payment rules depend on the price of the home:

• Homes up to $500,000: minimum 5% down.
• Homes from $500,001 to $999,999: 5% on the first $500,000, plus 10% on the portion above $500,000.
• Homes from $1,000,000 to $1,500,000: minimum 20% down — and since the purchase price cap for insured mortgages is $1.5 million (raised from $1 million effective December 15, 2024), no mortgage default insurance is available above that price at all.

For example, a $600,000 home needs a minimum down payment of $25,000 (5% of the first $500,000) + $10,000 (10% of the remaining $100,000) = $35,000.

The smaller your down payment, the higher your loan-to-value (LTV) ratio — the mortgage as a percentage of the home’s price — and the higher your premium. The premium is always calculated as a percentage of the mortgage amount (price minus down payment), not the full price.

The 2026 premium tiers

For amortization of 25 years or less (the standard), the CMHC premium is:

A couple of notes on that table:
– 20%+ down means no insurance is required — the 2.40% tier only applies in special cases (e.g., portable insurance or non-owner-occupied properties). If you put 20% down on your principal residence, you simply don’t pay this premium.
– 30-year amortization: Since December 2024, first-time buyers and buyers of newly constructed homes can stretch an insured mortgage to 30 years instead of 25. The trade-off is a 0.20% surcharge added to every tier above (so the 5% tier becomes 4.20%).

How the premium is paid

You almost never write a cheque for the premium. It gets added to your mortgage balance (financed), which means you pay interest on it for the entire life of the mortgage. You can pay it upfront at closing, but almost nobody does — it would mean keeping more cash tied up at the very moment you need it most.

One thing that is due at closing: provincial sales tax on the premium in some provinces. Unlike the premium itself, the PST cannot be financed — it comes out of your closing costs. The provinces that charge it on mortgage insurance premiums are Ontario (8%), Quebec (9.975%), Saskatchewan (6%), and Manitoba (7%). Rates can change, so check the current posted details for your province.

The stress test, briefly

Any insured mortgage must pass the mortgage stress test: you have to qualify at the higher of your contract rate plus 2%, or 5.25% — even though your actual payments are calculated at your contract rate. (OSFI’s Guideline B-20 requires this of federally regulated lenders; CMHC applies the same rule to insured qualification.) This is a major reason buyers qualify for less than they expect: a 4% contract rate means qualifying at 6%, not 4%. Budget around the qualifying payment, not the contract payment.

What it costs: a worked example

Let’s run the classic first-home scenario: a $500,000 home with 5% down.

• Down payment: 5% × $500,000 = $25,000
• Mortgage before insurance: $500,000 − $25,000 = $475,000
• Premium: $475,000 × 4.00% = $19,000
• Mortgage from day one: $475,000 + $19,000 = $494,000

So before you’ve made a single payment, you owe $19,000 more than the sticker price of your down payment implied — and you’ll pay interest on it for 25 years. At typical 2026 rates, that $19,000 premium costs roughly $28,000–$30,000 over the life of the loan. (Compare: 10% down on the same home means a $450,000 mortgage × 3.10% = $13,950 premium; 20% down means $0.)

Closing-day PST on the premium (Ontario example): $19,000 × 8% = $1,520 due at closing, on top of land transfer tax, legal fees, and moving costs.

How to buy

You don’t “buy” mortgage default insurance like a product — it happens automatically as part of your mortgage:

1. Get pre-approved with a bank or licensed mortgage broker. Bring proof of income (pay stubs, employment letter, T4s, and Notices of Assessment from the CRA), your down payment source, and your credit history.
2. The lender runs your numbers, including the stress test and your debt-service ratios. If your down payment is under 20%, they build the premium into the mortgage amount.
3. You sign the commitment letter showing the mortgage amount including the insurance premium. Review it — make sure the premium tier matches your actual LTV.
4. At closing, your lawyer confirms the final figures, you pay the PST on the premium and other closing costs, and the mortgage funds.

A licensed mortgage broker costs you nothing out of pocket (they’re paid by the lender) and can compare insured-mortgage pricing across dozens of lenders. For newcomers without Canadian credit history, a broker experienced with newcomer programs is worth finding.

Mistakes to avoid

1. Thinking the insurance protects you. It doesn’t. It protects the lender if you default. Nothing about it helps you make payments or forgives what you owe.
2. Forgetting the PST on the premium. First-time buyers budgeting to the last dollar get surprised by the 8% (Ontario) PST on the premium at closing. Add it to your closing-cost spreadsheet now.
3. Putting exactly 5% down without checking the next tier. On a $600,000 home, stretching to 10% down drops the premium rate from 4.00% to 3.10% — often worth finding the extra money if you can.
4. Confusing it with mortgage protection (life) insurance. Your bank may offer to add “mortgage insurance” that is actually optional life/disability insurance. That’s a separate product with its own pricing and alternatives (like term life insurance). Decide on it separately — never assume it’s required for the mortgage.
5. Ignoring the stress test in your budget. If you can only just afford the payment at your contract rate, you will fail to qualify. Work backwards from the qualifying rate.
6. Assuming a 30-year amortization is free money. It lowers your payment but costs a 0.20% premium surcharge and years more interest. Run the lifetime-cost comparison before choosing it.

FAQ

Do I pay CMHC insurance monthly or upfront?

Neither, typically — the premium is added to your mortgage balance and you pay it off (with interest) as part of your regular mortgage payments over the amortization. You can pay it upfront at closing instead, but almost no one does.

Who chooses CMHC vs Sagen vs Canada Guaranty?

Your lender does, not you. All three charge effectively identical premium schedules, so it makes no meaningful difference to your cost.

Can I avoid the premium entirely?

Yes — put 20% down (or more) on your principal residence. The catch: you still need to meet minimum down payment rules and pass the stress test, and the home must cost $1.5 million or less to be insurable.

Does the premium get refunded if I sell early or refinance?

No — the premium is non-refundable. If you port your mortgage to a new property, the insurance can sometimes be transferred (“portability”), which may save you paying a full new premium. Ask your lender whether portability applies to your mortgage.

Is the premium tax-deductible?

No — for a principal residence, the mortgage insurance premium is not tax-deductible in Canada. (Different rules can apply for investment properties; talk to a tax professional.)

Do newcomers face different CMHC rules?

No — the insurance rules are the same for everyone. But newcomers often face a separate hurdle: limited Canadian credit history. A credit score of at least 680 (from at least one borrower) is typically required to qualify for an insured mortgage through any of the three insurers. See our guide on building credit in Canada first if that’s your gap.

Does the stress test apply at renewal?

Generally no — if you renew with the same lender or switch between federally regulated lenders without increasing your balance or amortization, you don’t re-do the stress test. It applies to new purchases and refinances.

Sources

• CMHC — Mortgage loan insurance premiums and calculations: cmhc-schl.gc.ca (search “calculating your premium”; 2026 tier schedule: 4.00% / 3.10% / 2.80% / 2.40% / 1.70% / 0.60% for 25-year amortization, +0.20% for eligible 30-year amortization).
• Government of Canada — Federal mortgage reforms effective December 15, 2024 (insured price cap raised to $1.5 million; 30-year amortization for first-time and new-construction buyers): canada.ca.
• OSFI Guideline B-20 — Minimum qualifying rate: the greater of the contract rate + 2% or 5.25%: osfi-bsif.gc.ca.
• FCAC (canada.ca) — Mortgage qualifier and stress test explainers: canada.ca/en/financial-consumer-agency.
• Provincial sales tax rates on mortgage insurance premiums (Ontario, Quebec, Saskatchewan, Manitoba) per each insurer’s published schedule — check the current posted details at closing.

LearnLoonie is financial education, not financial advice. Premium schedules, tax rates, and mortgage rules change — confirm everything with your lender or a licensed mortgage broker before you buy.