What is CMHC mortgage insurance?
CMHC (and private insurers Sagen and Canada Guaranty) provide mortgage default insurance, which is mandatory in Canada when your down payment is less than 20% of the purchase price. It protects the lender if you default. The premium is a percentage of your loan, added to your mortgage and paid over the amortization.
How much is CMHC insurance?
The premium depends on your loan-to-value ratio: roughly 2.80% of the loan for 80.01-85% LTV (15-19.99% down), 3.10% for 85.01-90% LTV, and 4.00% for 90.01-95% LTV (the maximum, requiring at least 5% down). A larger down payment lowers the premium rate and the amount insured.
Yes, in some provinces. Ontario (8%), Quebec (9%), and Saskatchewan (6%) charge provincial sales tax on the mortgage insurance premium. Unlike the premium itself, this PST must be paid up front at closing and cannot be added to the mortgage, so budget for it as a closing cost.
Can I avoid CMHC insurance?
Yes — put down 20% or more of the purchase price and mortgage insurance is not required. Note that homes priced at $1.5 million or more (as of the December 2024 change) are not eligible for insured mortgages at all, so they require at least 20% down regardless.