CMHC Insurance Explained: What Mortgage Default Insurance Really Costs You
By Jordan Ellis · Published · Reviewed
Quick Answer
Mortgage default insurance (CMHC, Sagen, or Canada Guaranty) is mandatory in Canada when your down payment is under 20%, and it protects the lender — not you. The premium is 4.0% of the mortgage at 5-9.99% down, 3.1% at 10-14.99%, and 2.8% at 15-19.99%, added to your mortgage balance and paid off with interest over the amortization. On a $600,000 home with 5% down, that is a $22,800 premium — over $30,000 with interest. It is not available on homes priced at $1.5 million or more, and provincial sales tax on the premium (8% in Ontario, 9% in Quebec, 6% in Saskatchewan) is due in cash at closing.
The least understood five-figure cost in Canadian real estate: default insurance protects your bank, you pay for it, and it quietly adds a car’s worth of debt to your mortgage. Here’s the whole system in one read.
The premium table
Insured mortgages (under 20% down) pay a premium on the mortgage amount, tiered by loan-to-value:
| Down payment | Premium on mortgage | On a $600k home |
|---|---|---|
| 5–9.99% | 4.0% | $30,000 down → $22,800 premium |
| 10–14.99% | 3.1% | $60,000 down → $16,740 premium |
| 15–19.99% | 2.8% | $90,000 down → $14,280 premium |
| 20%+ | 0% | No insurance required |
Three providers — CMHC (Crown), Sagen, and Canada Guaranty — with near-identical pricing; your lender picks, not you. Price any scenario precisely with the down payment calculator.
The three quiet costs on top
- Interest on the premium. It’s added to principal, so that $22,800 costs roughly $30,000+ over 25 years at 5%.
- Provincial sales tax — in cash. Ontario charges 8% PST on the premium ($1,824 on the example above), Quebec 9%, Saskatchewan 6% — due at closing, cannot be financed. Add it to your closing costs budget.
- You still owe after a default. If the insurer covers the lender’s loss, it can pursue you for the deficiency. The insurance was never yours.
The rules box
- Required: under 20% down, owner-occupied, price under $1.5M
- Not available: $1.5M+ homes, refinances, rentals under 20% down
- Amortization: 25 years standard; 30 years for first-time buyers and new builds (since December 2024) — see the 25 vs 30 year math
- Minimum down: 5% on the first $500,000, 10% on the portion from $500,000 to $1.5M — full table in down payment rules
- The upside: insured mortgages are safer for lenders, so they often carry rates 0.1–0.3% lower than uninsured ones — a small rebate for the premium
5% down now vs 20% down later — the real comparison
Buying the $600,000 home today at 5% down costs ~$30,000 in premium-with-interest. Saving the extra $90,000 to reach 20% takes, say, 4 years at $1,875/month — during which you pay rent and the market moves. If prices rise 4%/year, that home is $702,000 by then and your extra saving bought you less than it cost. If prices are flat or falling, waiting wins outright.
There’s no universal answer — there’s your market and your savings rate. Model the purchase at 5%, 10%, and 20% down in the mortgage stress test calculator, and if you’re a first-timer, stack the first-time buyer programs (FHSA, HBP, GST rebate) into the down payment before accepting the 4% tier.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .
- Mortgage loan insurance cost (CMHC)