CMHC Mortgage Insurance FAQ 2025

What is CMHC Mortgage Loan Insurance?

CMHC mortgage loan insurance, also known as mortgage default insurance, is a mandatory insurance for homebuyers in Canada who make a down payment of less than 20% on a home purchase under $1.5 million. It protects the lender, not the borrower, in case the borrower defaults on mortgage payments. This insurance allows buyers to qualify for mortgages with smaller down payments, often as low as 5%.

Do I Need CMHC Mortgage Insurance?

You need CMHC insurance if:

Your down payment is less than 20% of the home’s purchase price.
Your home price is $1.5 million or less.
Your loan-to-value ratio (LTV) is more than 80%.

You do NOT need it if:

Your down payment is 20% or more.
Your home price is above $1.5 million (CMHC insurance not available).

How Much Does CMHC Insurance Cost?

Premium rates vary based on your down payment size, ranging from 0.6% to 4.5% of the mortgage amount.
The smaller your down payment, the higher your premium.
Premiums can be added to the mortgage amount or paid upfront (usually added).
Example: On a $500,000 home with 5% down, a 4% premium means approximately $19,000 in added mortgage insurance.

Does CMHC Insurance Protect Me?

No, the insurance protects the lender from losses if you default. However, it helps you gain access to mortgage financing with a lower down payment and often lower interest rates due to reduced lender risk.

Can I Avoid Paying CMHC Insurance?

Only by:

Putting down 20% or more upfront.
Purchasing a home priced above $1.5 million (though you lose insurance benefits).

Otherwise, mortgage loan insurance is mandatory for high-ratio loans.

Can CMHC Deny My Insurance?

Yes. CMHC can refuse insurance if:

You have poor credit history or previous foreclosure.
Your debt servicing ratios exceed maximum limits.
The property is deemed too risky (location, condition).
Your application doesn’t meet CMHC eligibility requirements.

Is the Premium Refundable?

Generally, no. Once the premium is paid, it is not refundable. However, partial refunds exist for energy-efficient homes, early mortgage cancellation, and mortgage portability under certain conditions.

Can I Get Lower Mortgage Rates with CMHC Insurance?

Yes. Mortgages insured by CMHC often have lower interest rates because lenders face lower default risk, resulting in savings over the mortgage term.

How is the CMHC Premium Paid?

The premium is typically added to the mortgage principal and paid off gradually with your mortgage payments. It is not paid separately as a lump sum unless negotiated differently with your lender.