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CMHC Insurance

Learn what CMHC Insurance is, when it's required in Canadian real estate, how much it costs, and how it affects homebuyers with low down payments.

CMHC Insurance

May 22, 2025


What is CMHC Insurance?

CMHC Insurance, also known as mortgage loan insurance, is a government-backed insurance policy provided by the Canada Mortgage and Housing Corporation (CMHC) that protects lenders in case a borrower defaults on a high-ratio mortgage.

Why CMHC Insurance Matters in Real Estate

In Canada, homebuyers who make a down payment of less than 20% are required by law to obtain mortgage loan insurance from CMHC or another approved provider. This insurance protects the lender — not the borrower — by covering losses in the event of mortgage default.

While it doesn’t benefit the buyer directly, CMHC Insurance enables them to purchase a home with as little as 5% down, which is crucial in high-priced housing markets. It helps stabilize the housing market and reduces risk for lenders, making mortgages more accessible to Canadians with lower savings.

The cost of CMHC Insurance is based on a sliding scale tied to the loan-to-value ratio and is typically added to the mortgage principal or paid as a lump sum. Premiums range from 2.8% to 4% of the mortgage amount, depending on the size of the down payment.

Understanding CMHC Insurance is key for budgeting, especially for first-time homebuyers, and for making informed decisions about down payment strategy and overall affordability.

Example of CMHC Insurance

A buyer in Ontario purchases a $500,000 home with a 10% down payment. Since this is less than 20%, they must pay a CMHC Insurance premium of $13,950, which is added to their mortgage.

Key Takeaways

  • Required for down payments under 20%.
  • Protects the lender in case of borrower default.
  • Provided by CMHC and other approved insurers.
  • Cost is based on mortgage size and down payment.
  • Enables access to homeownership with smaller savings.

Related Terms

Additional Terms

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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