If you’re buying a home in Canada with less than 20% down, your mortgage must be insured against default. CMHC is the best known insurer. The core rules are simple: the home must cost less than $1.5 million, you need at least 5% down on the first $500,000 and 10% on the portion above that, and you pay a one-time premium of up to 4.50% of your mortgage.
This guide covers each CMHC rule in plain language: down payment, premium costs, who qualifies, which properties are eligible, and the programs that can lower your cost. It reflects the rules in place since December 15, 2024, when the price cap rose to $1.5 million and 30-year amortizations opened up to more buyers.
What Is CMHC Insurance?
CMHC insurance is mortgage default insurance from the Canada Mortgage and Housing Corporation, a federal Crown corporation. It protects your lender, not you. If a borrower stops paying and the home sells for less than what is owed, the insurer covers the lender’s loss.
Because the lender’s risk is covered, it can lend you up to 95% of the home’s value and usually offers you a lower interest rate than on an uninsured mortgage.
CMHC is not the only insurer. Sagen and Canada Guaranty are private insurers that offer the same kind of coverage. All three follow the same federal rules on price limits, down payment and amortization, though each sets its own premiums and fine print. Your lender or broker picks the insurer, and most borrowers never notice the difference.
When Is CMHC Insurance Required?
Mortgage insurance is required when your down payment is less than 20% of the purchase price. These are called high-ratio mortgages, because the loan-to-value (LTV) ratio is above 80%.
Federally regulated lenders, such as the big banks, must insure every high-ratio mortgage. Most other lenders follow the same rule.
You do not need mortgage insurance when:
- You put down 20% or more (a conventional mortgage)
- The home costs $1.5 million or more. These homes can’t be insured, so 20% down is the minimum.
CMHC Minimum Down Payment Rules
Your minimum down payment depends on the price and the number of units.
| Property | Minimum down payment |
|---|---|
| 1 to 2 units, under $500,000 | 5% |
| 1 to 2 units, $500,000 to under $1.5 million | 5% of the first $500,000 + 10% of the rest |
| 3 to 4 units, owner occupied | 10% |
| Any home $1.5 million or more | 20% (no insurance available) |
Examples for a 1 to 2 unit home:
- $500,000 home: $25,000 minimum (5%)
- $800,000 home: $25,000 + $30,000 = $55,000
- $1,000,000 home: $25,000 + $50,000 = $75,000
- $1,500,000 home: not insurable, so 20% = $300,000
3 to 4 unit example: a $900,000 fourplex where you live in one unit needs at least $90,000 (10%).
Does CMHC Insurance Apply to Homes Over $1 Million?
Yes. Before December 15, 2024, the cap was $1 million and any home at or above that price needed 20% down. Today, homes priced under $1.5 million can be insured. That cut the minimum down payment on a $1 million home from $200,000 to $75,000.
Your down payment must come from your own resources, such as savings, RRSP withdrawals, a FHSA, proceeds from selling a property, or a non-repayable gift from a relative. Borrowed down payments are only allowed in limited cases (see premiums below).
CMHC Insurance Premiums
The premium is a one-time fee. It’s based on your loan-to-value ratio, the size of your mortgage compared to the home’s value.
| Loan-to-value | Down payment | Premium (% of mortgage) |
|---|---|---|
| Up to 65% | 35% or more | 0.60% |
| 65.01% to 75% | 25% to 34.99% | 1.70% |
| 75.01% to 80% | 20% to 24.99% | 2.40% |
| 80.01% to 85% | 15% to 19.99% | 2.80% |
| 85.01% to 90% | 10% to 14.99% | 3.10% |
| 90.01% to 95% | 5% to 9.99% | 4.00% |
| 90.01% to 95%, non-traditional down payment | 5% to 9.99% (borrowed) | 4.50% |
Premiums at 20% down or more apply only when a lender chooses to insure a conventional mortgage. Most buyers with 20% down pay no premium at all.
30-year amortization: if you qualify for a 30-year amortization, 0.20% is added to your premium rate.
How Much Is CMHC Insurance? An Example
You buy a $600,000 home with 10% down ($60,000):
- Mortgage before insurance: $540,000
- Loan-to-value: 90%, so the premium is 3.10%
- Premium: $540,000 x 3.10% = $16,740
- New mortgage balance: $556,740
With a 30-year amortization, the rate becomes 3.30%, for a premium of $17,820.
Ontario Buyers: Sales Tax on the Premium
In Ontario, you pay 8% provincial sales tax on the premium, and it can’t be added to your mortgage. It’s due in cash at closing, usually through your lawyer. In the example above, that’s $16,740 x 8% = $1,339.20. Quebec and Saskatchewan also charge sales tax on the premium. Budget for it alongside land transfer tax and legal fees.
Paying the premium: most borrowers add the premium to the mortgage. That means paying interest on it over time. You can also pay it upfront at closing.
Borrower Requirements
To qualify for an insured mortgage, you must meet these standards:
- Credit score: at least one borrower or guarantor needs a score of 600 or higher. Lenders often want more for their best rates.
- Debt ratios: your housing costs (mortgage, property tax, heating, and half of condo fees) can’t exceed 39% of your gross income (GDS). All your debts together can’t exceed 44% (TDS).
- Stress test: you must qualify at the higher of your contract rate plus 2%, or 5.25%.
- Income: you must show stable income, such as pay stubs and a job letter if you’re employed, or Notices of Assessment if you’re self employed.
Not sure where your credit stands? Read our guide to understanding your credit score.
Property Rules
- Owner occupied: the home must be for you to live in, as your main home or under CMHC’s Second Home option. You can rent out other units in a 2 to 4 unit home as long as you live in one.
- 1 to 4 units: single-family homes, condos, duplexes, triplexes and fourplexes all qualify.
- Year-round use: the home must be suitable for full-time living with year-round road access. Many seasonal cottages don’t qualify.
- Price: under $1.5 million.
- Rental properties: a home you won’t live in can’t get high-ratio insurance. You’ll need at least 20% down.
Amortization: 25 or 30 Years
The standard maximum amortization on an insured mortgage is 25 years. Since December 15, 2024, you can choose 30 years if you’re a first-time home buyer or you’re buying a newly built home. That lowers your monthly payment, but you pay more interest overall, plus the 0.20% premium surcharge.
Use our mortgage payment calculator to compare 25 and 30 years.
CMHC Programs Worth Knowing
CMHC Newcomers. Permanent residents have access to all CMHC homeowner products. People without permanent residence who are legally authorized to work in Canada can get insurance on a home they’ll live in. There’s no minimum time you need to have lived in Canada. If your Canadian credit history is thin, CMHC may accept an international credit report or a reference letter from a bank in your home country. Non-permanent residents can’t use a borrowed down payment, and the purchase must be allowed under the federal foreign buyer ban.
CMHC Self-Employed. Business owners can buy with as little as 5% down. Lenders may use your Notices of Assessment and business documents, and may gross up sole proprietor income by up to 15%. About two years in business is recommended but not required. See our self employed mortgage options.
CMHC Second Home. This lets you buy a second home for your own use, such as a home closer to work or family, with less than 20% down. The home must be available for year-round use, and you can have up to two CMHC-insured homes at a time.
CMHC Portability. If you sell and buy within a short window, you may be able to carry your existing insurance to the new home. You then pay a premium only on any increase to your loan, and you get a credit for the premium you already paid. The sooner you buy after selling, the bigger the credit. Ask your lender before you sell.
CMHC Eco Plus and Eco Improvement. You can get a 25% refund of your premium if you buy an energy-efficient home or make energy-saving upgrades to an existing one.
Secondary suite refinancing. Insured refinancing is normally not allowed. Since January 15, 2025, though, homeowners adding a secondary suite can refinance up to 90% of the home’s value after the work, on homes worth up to $2 million. See our guide to home renovation loans in Ontario.
How to Avoid CMHC Fees
- Put 20% down. It’s the only sure way to avoid the premium completely.
- Use a gift. A non-repayable gift from a relative counts toward your down payment and can push you into a lower premium tier, or past 20%.
- Aim for the next tier. Moving from 9% down to 10% cuts the premium rate from 4.00% to 3.10%. On a $500,000 mortgage, that saves about $4,450.
- Port your existing insurance if you’re selling and buying.
- Claim the Eco refund if your home or upgrades qualify.
- Pick 25 years instead of 30 if you can afford the payment, to skip the 0.20% surcharge.
Pros and Cons of CMHC Insurance
Pros
- Buy with as little as 5% down instead of waiting years to save 20%
- Insured mortgages often get lower interest rates
- 30-year amortization for first-time buyers and new builds
- Programs for newcomers and self employed buyers
Cons
- The premium can add thousands to your mortgage, plus interest
- Ontario sales tax on the premium is due in cash at closing
- Only for homes under $1.5 million that you’ll live in
- The premium is not refunded if you sell early (unless you port it)
Frequently Asked Questions
Is CMHC insurance required if I put 20% down?
No. Mortgage insurance is only required when your down payment is under 20%.
Does CMHC insurance apply to homes over $1 million?
Yes, for homes priced under $1.5 million. On a $1 million home, the minimum down payment is $75,000. Homes at $1.5 million or more need 20% down.
How much does CMHC insurance cost?
Between 0.60% and 4.50% of your mortgage, depending on your down payment. With 5% to 9.99% down, it’s 4.00%. In Ontario, add 8% sales tax on the premium, paid at closing.
Can I add the CMHC premium to my mortgage?
Yes, the premium can be added to your mortgage balance. The Ontario sales tax on the premium can’t. It must be paid in cash at closing.
What credit score do I need for CMHC?
At least one borrower or guarantor needs a credit score of 600. A higher score improves your chances and your rate.
Is CMHC insurance refundable if I sell?
No. However, CMHC Portability may give you a credit toward insurance on your next home, and the Eco programs refund 25% of the premium on energy-efficient homes.
Can I get CMHC insurance on a rental property?
Not for a home you won’t live in. If you live in one unit of a 2 to 4 unit property, you can rent the others and still get insurance. A 3 to 4 unit property needs at least 10% down.
Talk to a LendToday Mortgage Specialist
CMHC rules decide how much you need for a down payment and what your mortgage will really cost. Our brokers compare insured options from over 50 lenders and show you the full cost, premium and sales tax included, before you buy.
Let’s Chat About CMHC or explore our home buyer mortgage options.
