Mortgage default insurance: CMHC premiums and the 20 percent line

Mortgages · 7 min read · Figures checked October 13, 2026

Buy a home with less than 20 percent down in Canada and the mortgage must carry default insurance. The premium is not small — on a typical first home it runs from roughly fourteen thousand to well over twenty thousand dollars — yet most buyers meet it as a single unexplained line in the mortgage paperwork. This guide explains what the insurance actually is, lays out the full official premium table, prices one home at four different down payments, and gives a framework for the real decision: whether extra savings are better spent crossing into a cheaper premium band, or spent getting into a home sooner.

What this insurance is, and who it protects

Mortgage default insurance protects the lender, not the buyer. If a borrower stops paying and the sale of the home does not cover the loan, the insurer covers the lender's loss. The buyer pays the premium anyway, because the insurance is what makes a low-down-payment mortgage possible at all: without it, lenders would simply require 20 percent down from everyone.

Three insurers operate in this market — CMHC, a federal Crown corporation, and two private insurers, Sagen and Canada Guaranty. The buyer does not choose between them; the lender does. That is not a problem in practice, because the premium schedules the insurers publish are effectively aligned, and the rules below are the ones that drive the cost.

When it is required: the thresholds

The dividing line is the down payment. Below 20 percent down, the mortgage is called high-ratio and insurance is mandatory. At 20 percent or more, the mortgage is conventional and no insurance is required. The smallest down payment allowed follows the tiered minimum: 5 percent on the first $500,000 of the price and 10 percent on the portion above that. CMHC's own worked example uses a $760,000 home: the minimum down payment is $25,000 plus $26,000, or $51,000 in total, against $152,000 for a conventional 20 percent down payment on the same home.

Two limits frame the system. First, an insured mortgage cannot exceed 95 percent of the home's value — the tiered minimum down payment is what enforces that. Second, insured mortgages are only available up to a price cap, which the federal government raised from $1 million to $1.5 million effective December 15, 2024. Above the cap, a buyer needs at least 20 percent down because insurance is simply not available.

The full premium table, in plain language

CMHC calculates the premium as a percentage of the loan amount, and the percentage steps up as the loan-to-value ratio rises. The published schedule for homeowner loans on owner-occupied properties, checked October 13, 2026, is:

Three details in the fine print change real budgets. First, the premium is a one-time charge that is usually added to the loan amount, which means interest is paid on it for as long as that portion of the balance remains — the premium costs more than its sticker price over a long amortization. Second, in Ontario, Quebec, and Saskatchewan the premium is subject to provincial sales tax, and that tax cannot be added to the loan; in Ontario the 8 percent tax on the premium is cash due at closing. Third, an amortization beyond 25 years carries a 0.20 percent premium surcharge, which matters now that longer amortizations are available to more first-time buyers. A partial offset exists at the other end: CMHC notes that up to a 25 percent premium refund may be available when the insurance finances an energy-efficient home.

One home, four down payments: the premium math

Take a $600,000 home and move only the down payment. The premium figures below apply CMHC's table to the resulting loan, with the Ontario sales tax on the premium shown separately because it is due in cash.

The pattern to notice is the shape of the savings. Moving from the minimum down payment to 10 percent costs an extra $25,000 of savings and cuts the premium by $5,860. Moving from 15 percent to 20 percent costs an extra $30,000 and eliminates the remaining $14,280 premium entirely, along with its sales tax. The premium bands are steps, not a slope: a down payment that lands just inside a cheaper band captures the full step, while one that falls just short captures none of it. Buyers close to a band edge — 10, 15, or especially 20 percent — should run the exact numbers for their price before deciding how much to put down, because a small top-up at the right threshold can be worth several thousand dollars.

The December 2024 changes that widened the door

Effective December 15, 2024, the Department of Finance Canada raised the insured mortgage price cap from $1 million to $1.5 million and expanded 30-year insured amortizations to all first-time home buyers and to anyone buying a newly built home. For premium planning, the two changes pull in opposite directions. The higher cap lets buyers in expensive markets use a small down payment on homes that previously demanded 20 percent — but the premium at a high loan-to-value is the most expensive kind. The 30-year option lowers the monthly payment, yet it lengthens the period over which interest accrues on a premium that was rolled into the loan, and it attracts the 0.20 percent surcharge noted above. Neither change is simply good or bad; both make the premium math worth doing explicitly instead of accepting whatever structure is offered first.

A decision framework: buy sooner or save to a band edge

This is a decision guide rather than a procedure, because the right answer depends on prices, rent, and how long saving the extra amount would actually take — so instead of fixed steps, use these questions in order:

1. How far is the next band edge? Calculate the premium at the current down payment and at the next threshold (10, 15, or 20 percent) for the target price. If the gap is a few thousand dollars of extra savings, the step saving is usually within reach.
2. What does waiting cost? Compare the premium saving against rent paid while saving and the risk that prices move. A $5,860 premium saving that takes two extra years of renting to achieve is a different bargain than one that takes two extra months.
3. What cash remains after closing? The premium's provincial sales tax, land transfer tax, and legal costs are all cash. A down payment that empties every account to reach a band edge can be worse than a slightly larger premium with a reserve intact.
4. How long will the home be kept? The premium is a sunk, one-time charge. It is easier to justify when the alternative is years of delay, and harder to justify when a move within a few years is already likely.

What success looks like: the buyer can state, in dollars, the premium at their chosen down payment, the premium at the next band edge, and the cash left over after closing — and chose the structure anyway, knowingly, rather than discovering the premium on the commitment letter.

FAQ

Can the premium be paid in cash instead of added to the loan? The premium is a one-time charge that may be added to the insured loan amount, and adding it is the common practice. Ask the lender whether paying it upfront is an option; either way, the provincial sales tax on the premium in Ontario, Quebec, and Saskatchewan cannot be added to the loan and is due at closing.

Does a bigger down payment always beat buying sooner? No. The table shows what the premium costs, not what waiting costs. Rent, price movement, and the value of settling sooner all belong on the other side of the comparison, which is why the framework above prices both sides before deciding.

Is the premium refunded if the mortgage is paid off early? The premium is a one-time charge for the insurance coverage; CMHC's portability feature may allow a premium credit toward a new insured loan, with the credit depending on how much time has passed since the original closing. Confirm the specifics with the lender before relying on any credit.

General information only, not financial or mortgage advice. Premium rates, the insured price cap, and amortization rules are set by CMHC and the federal government and can change — confirm the current schedule and personal eligibility with a lender or licensed mortgage broker before acting.