Guide · Canada
CMHC Insurance Explained: Mortgage Default Insurance in Canada (2026)
Last updated 2026-07-12 · Published 2026-07-12
What CMHC (mortgage default) insurance costs, who needs it, and how it changes your monthly payment. Model both insured and uninsured scenarios in our free Canada mortgage calculator.
What CMHC insurance actually covers
Mortgage default insurance—commonly called CMHC insurance after Canada Mortgage and Housing Corporation, one of three approved providers alongside Sagen and Canada Guaranty—protects the lender, not you, if you stop making payments. Federally regulated lenders are required to arrange this insurance on any "high-ratio" mortgage, meaning a down payment of less than 20% of the purchase price.
Because the lender's risk is covered, insured mortgages are the mechanism that lets buyers purchase with as little as 5% down on homes under $500,000 (with a blended rate above that threshold up to the insured maximum). Without it, most lenders would require at least 20% down.
Who needs it, and who is exempt
Any owner-occupied purchase with a down payment below 20% and a purchase price under the insured-eligibility ceiling generally requires default insurance. Homes priced at or above $1,500,000 are not eligible for insured, low-down-payment financing under current federal rules, so buyers at that price point need at least 20% down.
Buyers who put down 20% or more avoid the premium entirely—their mortgage is considered "conventional" rather than high-ratio. Second homes and most rental properties are typically not eligible for the standard owner-occupied insured product and face different down payment minimums.
Worked example (illustrative numbers only)
Consider a $450,000 purchase with a 5% down payment ($22,500), leaving a base loan of $427,500. At an illustrative premium rate of 4%, the premium would be roughly $17,100, added to the loan for a final insured principal near $444,600. Compare that to a buyer putting down 20% ($90,000) on the same home, who borrows $360,000 with no premium at all.
Run both scenarios through our Canada mortgage calculator—once with the higher insured loan amount and once with the conventional 20%-down amount—to see the real gap in monthly payment and total interest over the amortization period.
Try the numbers yourself
Put your income, debts, rate, and term into our browser-only calculator for Canada. No signup required.
Go to calculator →Frequently asked questions
Can I avoid CMHC insurance with a cosigner instead of a bigger down payment?
A cosigner can help you qualify for the loan amount, but it does not remove the insurance requirement if your down payment is still under 20%. The requirement is tied to the loan-to-value ratio, not who is on the application.
Is the premium the same across CMHC, Sagen, and Canada Guaranty?
Base premium grids are broadly aligned across the three approved insurers because they operate within the same federal framework, though product features and surcharges (for extended amortization or non-traditional down payment sources) can differ. Ask your broker which insurer your lender is using.
Does a bigger down payment always beat paying the premium?
Usually yes in pure cost terms, but not always in practice—some buyers reasonably choose a smaller down payment to preserve cash for renovation, closing costs, or an emergency fund. Model both paths in the calculator and weigh the trade-off for your situation rather than assuming one answer fits everyone.
Is this guide financial or insurance advice?
No. Premium bands, eligibility thresholds, and price ceilings are set by federal policy and insurer rules that change periodically. Confirm current figures with a licensed mortgage broker or your lender before relying on them.
Educational content only—not mortgage, tax, or legal advice. Confirm any decision with a licensed professional in your jurisdiction.