Canadian Mortgage and Housing Corporation (CMHC) mortgage loan insurance, often called mortgage default insurance, is required if you buy a home with a down payment of under 20%.
It protects your lender should you default on repaying your mortgage loan. The mortgage default insurance premiums do not decrease even as your outstanding mortgage balance is paid off. Use our CHMC insurance calculator to find our your premiums.
In Canada, there are only three mortgage default insurance providers. They are: Canada Guaranty, Genworth Financial, and CMHC. Your lender will pick one for you.
How does CMHC insurance work?
You’re required to get mortgage default insurance if you want to buy a home with less than a 20% down payment.
The minimum down payment depends on your home's price: <$500 000 : the minimum down payment is 5% >$500 000 : the minimum down payment is 5% on the first $500 000 and 10% on the rest >$1 000 000 : not available. Must pay 20% down.
Our CMHC insurance calculator determines your mortgage insurance premium based on the size of your down payment or loan-to-value ratio.
Your Total Debt Service ratio should be less than 42
Gross Debt Service
Your Gross Debt Service ratio should be less than 35
Credit Score
Your Credit Score should be 680 or above
CMHC insurance premium rates
This chart outlines the approximate mortgage default insurance premiums for different scenarios:
Home down payment %
Premium rate
5%
4-4.5%
10%
3%
15%
2.75%
20%
2.30%
25%
1.65%
35%
0.6-0.75%
A higher down payment = lower premiums. Use our CHMC calculator to calculate your premiums.
Difference between CMHC insurance and mortgage life insurance
They are not the same and they provide coverage for very different things.
Mortgage life insurance is meant to protect you and your loved ones, should something unexpected happen to you during the amortization period of your mortgage.
Canadian Mortgage and Housing Corporation (CMHC) insurance is a one-time insurance payment you make if you plan on putting less than 20% down on your mortgage. It exists to protect your lender should you default on repaying your mortgage loan.
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How do you pay mortgage default insurance?
The mortgage default insurance premium is usually added to your mortgage. You pay it off overtime with your monthly mortgage payments Note: you pay the premium with interest overtime.
Alternatively, you can pay the mortgage insurance as one payment when you buy a home.
Want to reduce your payment further? Increasing your down payment reduces the amount of mortgage default insurance premium you pay.
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1. Do I need mortgage default insurance (CMHC insurance)?
You need to purchase Mortgage default insurance if you buy a home with less than a 20% down payment in Canada. This is a legal requirement as CMHC insurers your mortgage with the lender in case of a default.
2. Which companies offer mortgage default insurance in Canada?
There are only three companies that offer mortgage default insurance in Canada. They are: Canada Guaranty, Genworth Financial, and Canada Mortgage and Housing Corporation (CMHC). The lender will choose which company ends up insuring your mortgage.
3. What happens if I default on my mortgage?
CMHC covers the lender if you default with mortgage loan insurance. When you miss 3 months of payments, the lender can take possession of your house and sell it. They pay you the difference between the sale price and the remaining mortgage amount. If there’s a shortfall, CMHC covers their claim. However, CMHC will still try to collect the shortfall from you as a creditor.
4. How can I minimize my CMHC payments?
By increasing your downpayment, you reduce your CMHC mortgage insurance premium. For example, going from a 9% to a 10% down payment on a $600,000 home can reduce your premium by $5,000. If you put more than 20% down, then you do not need to pay mortgage default insurance.
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