Mortgage default insurance모기지 보험 (CMHC 보험)

What is it?

Mortgage default insurance covers the lender’s loss if the borrower stops paying the mortgage (the home loan). You pay the premium, but the insurance protects the lender, not you. This is the part people most often misunderstand.

In Canada, you must buy this insurance when your down payment (the part of the price you pay without a loan) is less than 20% of the price. A mortgage with a 5% to 19.99% down payment is called a “high-ratio mortgage” or an “insured mortgage”.

The formal names are mortgage default insurance or mortgage loan insurance. Many people just call it “CMHC insurance”. It is not home insurance (which covers fire and damage) and not mortgage life insurance (which pays off the loan if you die).

Who sells it?

Mortgage default insurance in Canada comes from CMHC (Canada Mortgage and Housing Corporation, a federal Crown corporation) and private insurers such as Sagen (formerly Genworth Canada) and Canada Guaranty.

Your lender arranges the insurance. CMHC suggests that, when you negotiate your loan terms, you ask for the mortgage to be CMHC insured. The premium table below is CMHC’s; ask your lender for the premium and rules of a private insurer.

How much is the premium?

The premium is a one-time charge. The percentage depends on the loan-to-value ratio (LTV: loan ÷ home value). The smaller your down payment, the higher the rate. This is CMHC’s published table (checked October 30, 2026).

CMHC’s table also lists rates for LTV of 80% or less (0.60%, 1.70%, 2.40%), but insurance is not required by law in that range (OSFI B-20). A 30-year amortization (CMHC Home Start) adds 0.20% to each band: 3.00%, 3.30%, 4.20% and 4.70%.

How do you pay it? What about tax?

• The premium is normally added to the mortgage principal and paid off with your regular payments. You can pay it as a lump sum, but most people add it. So the amount you really borrow is “price − down payment + premium”.
• Ontario charges 8% retail sales tax (RST, often called PST) on the premium. This tax cannot be added to the loan, so you pay it in cash at closing (the day you pay the balance and the home becomes yours) through your lawyer. It is an easy closing cost to forget.
• You also pay interest on the premium, because it sits inside the principal for the whole amortization.
• If you buy an energy-efficient home, programs such as CMHC Eco can refund up to 25% of the premium. Check the conditions with the insurer.

Which homes qualify

• The price (or lending value) must be below $1,500,000. At $1,500,000 or more, insurance is not available, so you need a down payment of at least 20%. (Budget 2026 says different rules start on February 1, 2027 for 3- and 4-unit (“missing middle”) homes. See “Budget 2026” below.)
• Minimum down payment: 5% of the first $500,000 of the price and 10% of the part above $500,000. For an $800,000 home that is $25,000 + $30,000 = $55,000.
• Maximum amortization is 25 years, or 30 years if any borrower is a first-time home buyer or the home is newly built (federal regulation SOR/2012-281, s. 5 (1.1)).
• Debt ratios: GDS no more than 39% and TDS no more than 44%, calculated at the stress-test rate (the greater of your contract rate plus 2% or 5.25%).
• At least one borrower needs a credit score of 600 or more, and you or a family member must live in the home. A purchase blocked by the foreign buyer ban cannot be insured.
• Canadian citizens, permanent residents and temporary residents with a work permit can all apply. Borrowed down payments (the 4.50% band) are not available to non-permanent residents.

Budget 2026 (November 5, 2026): what changes and what is proposed

• A change with a set date — February 1, 2027: to help “missing middle” housing, the budget says new mortgage insurance flexibilities for 3- and 4-unit homes (triplexes and fourplexes), and letting private insurers insure 5- to 50-unit residential properties, will come into effect on February 1, 2027. As of today (November 6, 2026) they are not in effect yet.
• The budget’s example (an illustration, not a list of rules): a builder planning a new $3,000,000 fourplex cannot get insurance today because the value is over the $1,500,000 cap and the builder would have to live in one unit. In this example the budget says: "Budget 2026 proposes to expand access to insured construction financing for newly built three- and four-unit housing." With that change, the budget says, the builder could get an insured loan for up to 90% of the value with no maximum value and no need to live there, then either rent out all four homes with an insured mortgage amortized over up to 30 years or sell the homes one by one. Because the budget calls this part a proposal (“proposes”), the budget documents we could open do not show whether this wider construction financing is part of the February 1, 2027 change or a separate proposal.
• Who it covers: the budget speaks of “newly built” 3- and 4-unit housing. Whether buying an existing triplex or fourplex also counts, and the other details, are in a Finance Canada technical backgrounder that we could not open to check. Ask your lender or CMHC.
• A proposal — not law yet: the budget proposes raising the home price limit for “optional mortgage insurance” from $1,000,000 to $1,500,000 and allowing 30-year amortizations for these insured mortgages, “provided that at least one borrower is a first-time home buyer or the home is newly built” (the budget’s words). The condition comes at the end of the one sentence that covers both changes, and the budget gives no more detail. No start date is given. “Optional” insurance seems to mean insurance on a loan with 20% or more down, which the law does not require (low-ratio insurance). That is a reading, because the current federal limit for low-ratio insured loans is under $1,000,000.
• Other proposals (none started yet): new regulations so the Bank of Canada publishes information on insured mortgage rates; a service for lenders and insurers to verify income through the CRA (Canada Revenue Agency), which needs a change to the CRA’s law; and a consultation on making prepayment penalties on insured mortgages easier to understand.

We did not find anything in this budget that changes the rules for high-ratio homeowner loans (under 20% down, for a home you will live in): the $1,500,000 cap, the premium rates, or the 25 and 30-year amortization rules (except for 3- and 4-unit missing middle homes). The table and rules above still apply (budget text checked November 6, 2026).

Worked example

Buying an $800,000 Toronto condo with the minimum down payment. Estimates for reference only.

If a first-time buyer takes the same home with a 30-year amortization, the band is 4.20%: premium $31,290 and RST $2,503.20. With a $160,000 (20%) down payment there is no premium and no RST.

Pros and cons of an insured mortgage

Pros: you can buy before you have saved 20%. Because the lender’s risk is lower, insured mortgages often get a lower interest rate than uninsured mortgages with 20% or more down. CMHC itself notes that without the insurance you would typically pay much higher rates.

Cons: the premium increases your debt and you pay interest on it. The $29,800 in the example is gone the day you buy. You must also meet every rule: price under $1,500,000, 25-year (or 30-year) amortization, and the GDS/TDS limits.

If you move later, “porting” the insurance to the new home can reduce or remove a new premium. CMHC says this option may exist for loans insured on or after April 1, 1996, so ask your lender.

Pre-construction and condos

A new condo bought from a builder follows the same rules. But the mortgage is funded at final closing (when title transfers), not at interim occupancy, so the insurer reviews your file at that time. A pre-approval from the day you signed the builder’s contract is not guaranteed to hold years later at closing.

A newly built home (never lived in) qualifies for the 30-year insured amortization even if you are not a first-time buyer. For a condo, living in the unit during interim occupancy before registration still counts as “newly built”.