CMHC Mortgage Insurance in Canada: Premium Math, the $1.5 Million Cap, and When 20% Down Wins (2026)

Short answer: With less than 20 percent down on a home priced at $1.5 million or less, Canadian lenders require mortgage default insurance. You pay the premium and the lender gets the protection. CMHC (Canada Mortgage and Housing Corporation) publishes the standard homeowner premium as a percentage of the loan amount by loan-to-value (LTV) band: 2.80 percent for LTV above 80 and up to 85 percent, 3.10 percent above 85 and up to 90 percent, and 4.00 percent above 90 and up to 95 percent (CMHC, Premium Information for Homeowner and Small Rental Loans). The premium is usually added to the mortgage, so you also pay interest on it for as long as it stays in the balance. In Ontario, Quebec, and Saskatchewan, provincial sales tax applies to the premium and that tax is due in cash at closing; it cannot be added to the loan (CMHC). Price your own price and down payment on the CMHC insurance calculator after reading the tiers below. Every worked figure in this guide is labeled hypothetical where a rate or return had to be assumed; the premium percentages, price cap, and down payment tiers are the published rules cited in each section.

By Finance Editorial Desk | October 8, 2026

Educational only, not mortgage, tax, or financial advice. Mortgage default insurance rules, premium schedules, and tax treatment are set by CMHC, the other insurers, the Department of Finance Canada, and provincial tax law, and lenders confirm the exact premium on your application. Confirm your premium, your down payment source rules, and your closing tax with your lender or broker before you write an offer.

1. What this insurance covers, and what it does not

Mortgage default insurance is a policy on your loan, not on you and not on your house. If you stop paying and the lender sells the property for less than the amount owing, the insurer pays the lender the covered shortfall. Three insurers write this coverage in Canada: CMHC, which is a federal Crown corporation, and the private insurers Sagen and Canada Guaranty. Your lender picks the insurer. You do not shop among the three, and the published homeowner premium schedule is the same shape across them: the rate follows your LTV band, so the shopping that changes your cost is the lender, the mortgage rate, and the size of your down payment, not the insurer name on the policy.

The policy buys one thing for you: entry with a smaller down payment. Without insurance, a federally regulated lender will not lend above 80 percent of the price, so every purchase would need 20 percent down in cash. With insurance, the minimum down payment drops to the tiered floor in section 3, which starts at 5 percent. Insured borrowers also often qualify at mortgage rates close to the rates offered on larger-down-payment loans, because the lender risk the rate pays for is carried by the insurer instead. What the policy never buys is protection for your income, your equity, or your payments. Miss payments and the insurer pays the bank, then can pursue you for what it paid. Treat the premium as the price of buying earlier with less cash, priced in section 5, never as cover for yourself.

2. When insurance is required, and when it is not available at all

Two lines divide every Canadian purchase:

• Below 20 percent down, price at or below $1.5 million: insurance is required. Your loan is high-ratio (LTV above 80 percent) and the lender must insure it before funding.
• 20 percent down or more: no default insurance is required. Your loan is conventional. Some lenders still insure conventional loans for their own funding reasons (often called bulk or portfolio insurance); that cost is not charged to you as a borrower-paid premium, so a conventional borrower should not see a CMHC line added to the mortgage.
• Price above $1.5 million: borrower-paid default insurance is not available at any down payment. The purchase needs at least 20 percent down by construction, because no insurer will write the loan above the cap.

The $1.5 million cap is recent. The Department of Finance Canada raised the insured price cap from $1 million to $1.5 million effective December 15, 2024, and at the same time expanded 30-year amortizations for insured mortgages to all first-time buyers and to buyers of newly built homes (Department of Finance Canada, September 2024 announcement; in force December 15, 2024). Pages and calculators written before that date still show a $1 million ceiling. That old line is wrong now, and section 8 prices what the new line does near the top of the range. Standard insured amortization remains 25 years; the 30-year option in section 7 applies only to the two eligible groups above and your lender confirms the premium schedule for the longer amortization on your file.

3. The minimum down payment is tiered, so "5 percent down" stops at $500,000

The minimum down payment is not a flat 5 percent. The published tiers for an insured purchase are:

Each rate applies only to the slice of price inside its band. A $700,000 purchase does not need 10 percent of $700,000; it needs 5 percent of the first $500,000 ($25,000) plus 10 percent of the remaining $200,000 ($20,000), for a minimum of $45,000. Worked through real prices, the effective percentage climbs as the price climbs:

Two planning errors come straight from this table. The first is budgeting 5 percent of a $900,000 target ($45,000) and arriving $20,000 short of the $65,000 floor. The second is treating the $1.5 million cap as a gentle slope. It is a step. At $1,500,000 the minimum is $125,000; one dollar higher, insurance disappears and the floor becomes 20 percent of the full price, about $300,000. Buyers shopping near the cap should run both sides of the line on the mortgage affordability calculator for Canada before falling for a listing just above it.

Your down payment source also has rules. Lenders verify the money, generally expect it to sit in your accounts for about 90 days, and accept a gift from immediate family with a signed gift letter stating the money is not a loan. Borrowed down payments and non-traditional sources can move you into the 4.50 percent premium band in the next section, so tell your broker where every dollar came from before the application is priced.

4. The premium schedule: your rate is set by one ratio

CMHC publishes the homeowner premium schedule for owner-occupied homes with one to four units as a percentage of the total loan amount (CMHC, Premium Information for Homeowner and Small Rental Loans; CMHC Purchase). The full schedule:

Read the table the way an underwriter does. Your down payment sets your LTV (loan divided by price), the LTV band sets the percentage, and the percentage applies to the whole loan, not to a slice of it. That last point creates the tier cliffs priced in section 5: moving your LTV from just above 90 percent to exactly 90 percent reprices every borrowed dollar from 4.00 percent to 3.10 percent, not just the dollars near the line.

Three schedule notes belong in every budget:

• The rows below 80 percent LTV (0.60, 1.70, and 2.40 percent) rarely appear on a borrower-paid high-ratio purchase, because 20 percent down removes the requirement. They matter for portability and for specific insured products your lender may describe; if a quote shows one of them, ask which product you are in.
• CMHC notes that its Eco products can refund part of the premium (published as up to 25 percent) on qualifying energy-efficient purchases or improvements. If your home qualifies, the refund returns after closing; budget the full premium first and treat any refund as a rebate, not as a lower closing number.
• The premium is non-refundable once paid, with one practical exception: portability. Moving an insured mortgage to a new property can carry a premium credit based on how recently the original premium was paid (CMHC publishes 100 percent within 6 months, 50 percent within 12 months, and 25 percent within 24 months on its portability page). If you expect to move within two years, ask about porting before assuming the premium is simply gone.

5. Three purchases priced in full

The three examples below use the published schedule at a 25-year amortization. No mortgage rate is needed to price the premium itself; a rate enters only in section 6, where the cost of financing the premium is shown and labeled. Run each one against your own numbers on the CMHC insurance calculator as you read.

Purchase A: $500,000 with minimum down. Down payment $25,000 (5.0 percent). Loan $475,000. LTV 95.0 percent, so the 4.00 percent band applies. Premium: $475,000 x 4.00 percent = $19,000. Total mortgage at closing: $475,000 + $19,000 = $494,000. You brought $25,000 of your own money and owe $494,000; the gap between the $500,000 price and your cash is the loan plus the price of insuring it.

Purchase B: $650,000, four ways. This price shows the tier math better than any other, because each step crosses a band line:

Moving from the $40,000 minimum to $65,000 down costs $25,000 more cash and does three things at once: it removes $25,000 of loan principal, it drops the premium from $24,400 to $18,135 (a $6,265 saving, because the whole $585,000 repriced from 4.00 to 3.10 percent), and it cuts the interest charged on both amounts for the life of the loan. Moving from $65,000 to $97,500 saves a further $2,665 of premium. The final step to 20 percent removes the remaining $15,470 entirely. A buyer sitting just below a band line (9 percent down, 14 percent down) is usually a few thousand dollars of cash away from repricing the entire loan; that is the first sensitivity to test in the calculator.

Purchase C: $900,000 at the minimum. Down payment $65,000 (7.2 percent, from the tier table in section 3). Loan $835,000. LTV 92.8 percent, premium at 4.00 percent: $33,400. Total mortgage $868,400. Raising the down payment to 10 percent ($90,000) drops the loan to $810,000 at 3.10 percent and the premium to $25,110, a saving of $8,290 for $25,000 more cash. At 15 percent down ($135,000), the premium is $21,420 on a $765,000 loan. At this price the premium alone exceeds many buyers' entire closing-cost budget, which is why the tax in the next sections catches people off guard.

6. Financing the premium costs more than the premium

The premium is usually added to the mortgage rather than paid in cash (the tax on it is the exception, covered in section 7). Added to the balance, it is repaid over the full amortization with interest. At a labeled hypothetical 4.49 percent mortgage rate, compounded semi-annually as Canadian fixed rates are quoted, over a 25-year amortization, the premium slices from section 5 cost:

Read the middle row pair as the tier-cliff payoff in cash terms. The $6,265 premium saving from crossing to 10 percent down on the $650,000 purchase avoids about $10,392 of total payments over 25 years at the hypothetical rate ($40,474 minus $30,081), because you stop paying interest on the saved premium as well. Your rate will differ from 4.49 percent, and most borrowers renew, move, or prepay long before year 25, so treat these totals as the price of carrying the premium for the full amortization, not as a prediction of what you will pay. The shape holds at any rate: financing a one-time premium over 25 years repays roughly one and two-thirds times the premium.

Two comparisons follow. First, paying the premium in cash at closing (where your lender allows it) avoids that interest entirely; ask whether your lender permits an upfront premium payment and compare it with keeping the cash invested or held as your emergency reserve. Second, this interest cost is still only one side of the wait-versus-buy choice in section 9. The premium and its interest are known numbers. Future house prices and future rates are not, and this guide does not forecast them.

7. The cash tax on the premium in Ontario, Quebec, and Saskatchewan

Ontario, Quebec, and Saskatchewan apply provincial sales tax to the mortgage insurance premium, and CMHC states plainly that this tax cannot be added to the loan amount. It is cash due at closing, on top of your down payment, land transfer tax, and legal fees. Current provincial rates applied to the premium are 8 percent in Ontario (retail sales tax on insurance premiums), 9.975 percent in Quebec (QST), and 6 percent in Saskatchewan (PST). Manitoba removed its tax on these premiums in 2020, and the remaining provinces do not tax the premium. On the premiums priced above:

Budget this line before you choose your down payment, because it moves with the premium: the tier-crossing that saved $6,265 of premium on the $650,000 purchase also saves about $501 of Ontario tax ($6,265 x 8 percent) in cash you no longer need on closing day. First-time buyers sometimes assume a rebate covers this tax. It does not; land transfer tax rebates and the premium tax are separate lines, and only one of them has a rebate. Confirm the exact closing figure with your lawyer once the lender confirms the premium, since the tax follows the final premium on your commitment.

8. Near the cap: the $1.2 million to $1.5 million range

The December 2024 cap increase matters most between $1 million and $1.5 million, where insured buying was previously impossible. At $1,200,000, the minimum down payment is $95,000 (7.9 percent), the loan is $1,105,000, the LTV is 92.1 percent, and the premium at 4.00 percent is $44,200. At $1,500,000, the minimum is $125,000, the loan is $1,375,000, and the premium at 4.00 percent is $55,000. Those premiums look large because they are 4 percent of a seven-figure loan. Compare them with the alternative the cap removed: a 20 percent down payment of $240,000 at $1.2 million or $300,000 at $1.5 million. The insured route needs $145,000 to $175,000 less cash at closing and charges $44,200 to $55,000 of premium (plus interest if financed, plus provincial tax where it applies) for that difference. That is the trade, stated in full, with no forecast attached to it.

Buyers in this range should also test the amortization question early. A 30-year amortization, where eligible, lowers the monthly payment on a $1,375,000 insured loan by a wide margin and raises the total interest by more. Keep the two effects in separate columns of your budget, and get the lender's premium schedule for the longer amortization in writing, because the published homeowner table is quoted by LTV and the insurer confirms the final schedule on your application.

9. A test for waiting: when 20 percent down wins, and when it does not

Waiting to reach 20 percent down deletes the premium. Buying now with insurance deletes the wait. Decide with arithmetic you can write down, in this order:

1. Price your premium today. Use sections 4 and 5 or the CMHC insurance calculator. Add the interest cost of financing it (section 6) and the closing tax (section 7). On the $500,000 minimum-down purchase, that stack is $19,000 of premium, about $12,516 of interest at the labeled hypothetical rate over the full amortization, and $1,520 of Ontario tax: roughly $33,036 in total, of which $20,520 is committed even if you sell or refinance early (premium plus tax), since a premium already paid does not come back outside the portability window.
2. Price the wait. Divide the extra cash needed to reach 20 percent down by what you can actually save each month after rent. On the same $500,000 home, moving from $25,000 to $100,000 down needs $75,000 more. At $800 a month of real saving, that is about 94 months; at $1,500 a month, about 50 months. Use your bank balance history, not a budget you hope to start.
3. Check the tier cliffs before choosing the long wait. If you are within a few thousand dollars of the next LTV band, the short wait to cross it can beat both other options. Section 5 showed $25,000 more cash saving $6,265 of premium on a $650,000 purchase; smaller gaps near 10 percent or 15 percent down can save four figures for weeks of extra saving.
4. Name what the wait risks, without forecasting it. House prices, mortgage rates, your rent, and your job can all move during a four-to-eight-year wait, in either direction. This guide assigns no probabilities to those moves. If your decision only works under one assumed price path, it is not a decision yet; it is a bet. The premium, by contrast, is certain the day you sign.
5. Protect the reserve first. Cash moved into a down payment to dodge a premium is cash removed from your emergency fund. A buyer who reaches 20 percent down with nothing left has traded an insurance premium for a fragile first year of ownership. The emergency fund guide for Canada sizes that reserve; keep it intact and let the down payment be what remains.

The pattern across hundreds of these comparisons is consistent: waiting wins on paper when the wait is short (under roughly two years of realistic saving) or when it crosses a tier cliff, and the case weakens as the wait stretches, because rent paid during the wait is gone in full while the premium is the only part of the insured route that buys nothing you keep. Your numbers decide your case. Run both routes at your price, your saving rate, and your province's tax line before you commit to either.

10. Paying the premium down faster after you buy

Once the premium sits in your mortgage balance, it is ordinary principal. Every prepayment you make (annual lump sums, payment increases, accelerated biweekly schedules within your lender's prepayment terms) retires premium dollars along with purchase dollars and saves the interest those dollars would have carried. The accelerated biweekly mortgage guide for Canada prices that schedule on a $500,000 mortgage: accelerated biweekly payments clear the loan in about 21.7 years instead of 25 and save about $49,884 of interest at its labeled hypothetical rate. None of that refunds the premium itself (only the Eco refund and the portability credit in section 4 return premium money, on their own conditions), but it shortens the years you spend paying interest on it. At renewal, the mortgage refinance break-even guide shows how to test whether moving lenders or restructuring repays its penalty; an insured mortgage can also be renewed with a new lender without new insurance, since the policy follows the loan. Keep the premium in perspective there too: shopping the renewal rate on a $494,000 balance matters more than any remaining premium effect.

Buying with a gifted down payment, a borrowed down payment, or the RRSP Home Buyers' Plan changes pieces of this math (gift letters, the 4.50 percent non-traditional band, and repayment duties, respectively). The premium schedule itself does not change. If your purchase uses the First Home Savings Account or the Home Buyers' Plan, build the down payment from those accounts first, then price the insurance on the LTV that remains.

11. Frequently asked questions

What does CMHC insurance actually cost on a typical purchase? At the published homeowner schedule, 4.00 percent of the loan at 90.01 to 95 percent LTV, 3.10 percent at 85.01 to 90 percent, and 2.80 percent at 80.01 to 85 percent (CMHC). On a $500,000 purchase with 5 percent down, that is $19,000 on a $475,000 loan, usually added to the mortgage, plus provincial sales tax on the premium in Ontario, Quebec, and Saskatchewan. Price your figures on the CMHC insurance calculator.

Is 5 percent down allowed on a $900,000 home? No. The minimum is tiered: 5 percent on the first $500,000 plus 10 percent on the portion above it. At $900,000 the minimum is $65,000, which is 7.2 percent. Budgeting a flat 5 percent ($45,000) leaves you $20,000 short before the premium is even priced.

Do I choose between CMHC, Sagen, and Canada Guaranty? No. Your lender selects the insurer, and the standard homeowner premium follows the same LTV schedule. Your comparison work belongs on lenders and rates, on your down payment tier, and on closing costs, where the money actually differs.

Can the premium and its tax both go into the mortgage? The premium usually can; the tax cannot. CMHC states that provincial sales tax on the premium (Ontario, Quebec, Saskatchewan) cannot be added to the loan amount. On a $19,000 premium, that is $1,520 of cash at closing in Ontario, $1,895 in Quebec, and $1,140 in Saskatchewan.

What changed on December 15, 2024? The Department of Finance Canada raised the insured price cap from $1 million to $1.5 million and expanded 30-year insured amortizations to all first-time buyers and to buyers of newly built homes. Any source still showing a $1 million insured ceiling or 25 years as the only option is using the old rules.

Is it always better to wait for 20 percent down? No, and the premium math shows why the answer depends on the wait. Waiting deletes the premium (about $33,036 all-in on the $500,000 example at the labeled hypothetical rate and Ontario tax), but the wait costs rent and time, and section 9's test often flips on the tier cliffs: crossing from just above 90 percent LTV to 90 percent reprices the whole loan from 4.00 to 3.10 percent. Run your price and your real saving rate before deciding.

Can I get any of the premium back? In narrow cases. CMHC Eco products can refund part of the premium (published as up to 25 percent) on qualifying energy-efficient homes, and porting an insured mortgage to a new property within two years can carry a premium credit of 100, 50, or 25 percent depending on elapsed time (CMHC portability terms). Outside those cases the premium is a sunk cost, which is why prepayments that cut interest on the financed premium are the usual recovery route.

12. Related reading

• CMHC Insurance Calculator - price the premium at your price and down payment, then test the next tier line.
• Mortgage Stress Test Guide (Canada, 2026) - the qualifying-rate test your insured payment must also pass.
• Accelerated Biweekly Mortgage Payments in Canada - retire the financed premium faster after closing.
• Mortgage Refinance Break-Even in Canada - penalty math for restructuring the loan later.
• Emergency Fund in Canada - the reserve to keep intact before stretching for a larger down payment.