Guide · Canada
CMHC Insurance Explained 2026
By Muhammad Adeel, Founder · Last updated 2026-10-12 · 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.
Amortization length and premium surcharges
The headline premium bands most buyers see assume a standard amortization of up to 25 years. If you qualify for an extended amortization, for example the 30-year option available to eligible first-time buyers and buyers of newly built homes under current federal rules, a surcharge of 0.20% of the loan amount is added to the base premium. That surcharge is small in percentage terms, but on a large loan it still adds a meaningful dollar amount to what you finance.
The source of your down payment can also affect the premium. Buyers using a non-traditional down payment source, such as funds borrowed from a lender rather than saved or gifted, generally face a surcharge of 0.50% on top of the base premium, because the risk profile is different. A gifted down payment from an immediate family member is normally treated as a traditional source and does not attract this surcharge, which is one reason a properly documented gift letter matters.
Longer amortization lowers the monthly payment but increases total interest over the life of the loan, and the premium is calculated on the loan amount regardless of amortization. Model the 25-year and 30-year versions side by side in the calculator: the payment relief of a longer amortization is real, but compare it against the extra interest and the surcharge before deciding which suits your budget.
What happens to the premium when you sell, refinance, or renew
The premium is tied to the mortgage, not to you. If you sell and buy a new home with a new insured mortgage, a new premium applies to the new loan. When you refinance or switch lenders at renewal with the same balance, however, the existing insurance coverage can often be transferred, so you are not paying the full premium twice. If you increase the loan amount when refinancing, a top-up premium generally applies to the additional amount, not the whole balance.
At renewal time, the premium you paid years ago is not recharged: renewing or switching lenders with the same balance is an administrative move, not a new insurance event, provided the loan remains eligible. This is worth knowing because it means the premium is a one-time cost of entering the market with a small down payment, not a recurring charge.
Portability has limits, though. If your new purchase needs a much larger loan, the top-up premium on the increase can be meaningful, and the loan-to-value rules apply fresh to the new property. Ask your broker to confirm whether your insurer supports porting and what the top-up premium would be before you assume the old coverage carries over.
Sources
The figures and policy details in this article come from the following primary sources, checked at the time of writing.
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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.
Do I pay the premium again if I renew my mortgage?
No. Renewing or switching lenders with the same loan balance does not trigger a new premium; it is a one-time charge when the insured mortgage is funded. You only face additional premium if you refinance and increase the loan amount, in which case a top-up premium applies to the increase.
Does an insured mortgage get a better interest rate?
Often yes. Because the lender's risk is covered, insured mortgages can qualify for slightly lower rates than uninsured ones. That discount rarely outweighs the premium cost itself, but it narrows the gap, so compare the all-in cost (premium plus interest over the amortization) rather than the rate alone.
Can I get part of the premium refunded for an energy-efficient home?
CMHC offers a partial premium refund, up to 25%, for homes meeting recognized energy-efficiency standards, claimed after purchase with the required certification. Rules and eligible standards change, so ask your broker before closing whether your home qualifies and what documentation you will need.
Educational content only - not mortgage, tax, or legal advice. Confirm any decision with a licensed professional in your jurisdiction.