Calculate your mortgage default insurance premium and see how it affects your monthly payment.
CMHC Premium
$19,000
CMHC Premium Tiers
Mortgage default insurance protects the lender — not the borrower — in case you default on your mortgage. It is required by federal law when your down payment is less than 20% of the purchase price.
The premium is calculated as a percentage of your base mortgage amount (home price minus down payment). The rate depends on your loan-to-value ratio: 4% for 5-9.99% down, 3.1% for 10-14.99% down, and 2.8% for 15-19.99% down.
While the insurance premium adds to your total mortgage, it also allows you to access lower interest rates. Insured mortgages are considered lower risk by lenders, which often translates to rates that are 0.10% to 0.20% lower than conventional (uninsured) mortgage rates.
For properties over $500,000, the minimum down payment is 5% on the first $500,000 and 10% on any amount above that, up to $1,500,000. Properties above $1.5 million are not eligible for mortgage insurance and require at least 20% down.
Three providers offer mortgage default insurance in Canada: CMHC (Canada Mortgage and Housing Corporation), Sagen (formerly Genworth), and Canada Guaranty. All three use the same premium rate tiers. Your lender chooses the provider, but the cost to you is the same.
Yes, if your down payment is 20% or more of the purchase price, mortgage default insurance is not required. Some borrowers save longer to reach the 20% threshold, while others prefer to enter the market sooner with a smaller down payment and accept the insurance cost.
The CMHC premium is almost always added to your mortgage balance, meaning you finance it over the life of your amortization. This increases your total mortgage and slightly raises your monthly payment. You can also pay it as a lump sum at closing, but this is uncommon.
No. Properties with a purchase price over $1,500,000 are not eligible for mortgage default insurance. This means you must have a minimum 20% down payment for homes above this price point.
Ajay can help you decide whether to save for a larger down payment or enter the market now.