What it costs, when it's mandatory, and exactly how to avoid it
CMHC mortgage default insurance is mandatory if your down payment is less than 20% — and most first-time buyers pay it. But many buyers don't understand exactly what it costs or how it's calculated. This guide breaks it all down in plain numbers.
CMHC (Canada Mortgage and Housing Corporation) insurance protects the lender — not you — if you default on your mortgage. Despite protecting the lender, you pay the entire premium. It is required by law on all mortgages with less than 20% down on homes valued under $1.5 million. Three providers offer this insurance: CMHC, Sagen, and Canada Guaranty — your lender chooses which one.
Down payment 5%–9.99%: premium is 4.00% of the mortgage amount. Down payment 10%–14.99%: 3.10%. Down payment 15%–19.99%: 2.80%. The premium is added to your mortgage balance — you don't pay it in cash upfront, but you do pay interest on it over the life of the loan. Example: $600,000 home with 5% down ($30,000). Insured mortgage: $570,000. Premium: $22,800 (4%). Total mortgage: $592,800.
Save a full 20% down payment. Use the First Home Savings Account — contribute up to $8,000/year (lifetime max $40,000) and withdraw tax-free for a first home purchase. Use the RRSP Home Buyers' Plan — withdraw up to $35,000 from your RRSP tax-free (must be repaid over 15 years). Receive a documented gift from an immediate family member — must be proven as a true gift, not a loan.
Ontario and Quebec charge provincial sales tax on the CMHC premium. This PST must be paid in cash at closing — it cannot be added to the mortgage. In Ontario, PST is 8% of the premium amount. On a $22,800 premium, that's $1,824 in Ontario PST due on closing day. Budget for this separately in your closing cost estimate — it surprises many buyers.
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Read All ReviewsThese guides are written for Canadian buyers, sellers, renters, and landlords and are kept current for 2026. They are for informational purposes only — not legal, tax, or financial advice. Rules vary by province; confirm details with your lawyer, accountant, or licensed real estate professional before making decisions.