CMHC Mortgage Explained

What Is a CMHC Mortgage?

A CMHC mortgage refers to a home loan that is insured by the Canada Mortgage and Housing Corporation (CMHC). This insurance, also known as mortgage default insurance, enables buyers to secure a mortgage with less than a 20% down payment, making homeownership more accessible for Canadians. The insurance protects lenders in case a borrower defaults, lowering their risk and making it easier for buyers to obtain financing with a minimal down payment—even as little as 5%.

Learn more about how CMHC insurance is calculated.

Why Do Homebuyers Need CMHC Mortgage Loan Insurance?

CMHC mortgage insurance is mandatory in Canada for most residential purchases with down payments of less than 20%. Without insurance, most lenders would require a larger upfront payment, putting homeownership out of reach for many.

Needed when the down payment is less than 20% of the purchase price.
Only available on homes worth $1.5 million or less.
Enables buyers to access competitive mortgage rates, since risk for lenders is reduced.

Explore the CMHC qualification requirements.

Who Is Protected by CMHC Mortgage Insurance?

While this insurance is critical for facilitating affordability, it is designed to shield the lender—rather than the home buyer—from losses if the buyer can’t make mortgage payments. Homeowners indirectly benefit, however, by being able to purchase with a smaller down payment and often with better interest rates.

Compare CMHC and private mortgage insurance options.

How Do Premiums Work?

When a down payment is less than 20%, the insurance premium is paid by the buyer. This cost can either be paid as a lump sum or (most commonly) added to the mortgage, spreading out the extra amount over the life of the loan.

Premiums range from 0.6% to 4.5% of the mortgage amount depending on the size of the down payment. The smaller the down payment, the higher the premium rate.

Estimate your costs with our CMHC insurance calculator.

Down Payment Rules

For homes up to $500,000, a minimum 5% down payment is required.
For homes between $500,000 and $1,499,999, the first $500,000 requires 5%, with any amount above that requiring 10%.
Homes priced $1.5 million and up require 20% down and aren’t eligible for CMHC insurance.

See all CMHC rules and recent updates.

Amortization and Mortgage Stress Test

A CMHC-insured mortgage is limited to a 25-year amortization. Buyers must also pass a mortgage “stress test,” showing they can afford payments at current or higher interest rates.

Discover the full CMHC mortgage application process.

Who Qualifies for CMHC Insurance?

Eligibility factors include:

Minimum credit score (typically at least 680).
Gross debt service (GDS) ratio below 39% and total debt service (TDS) ratio below 44%.
Owner-occupied, residential properties only.

Get details in the How to Qualify for a CMHC Mortgage section.

Benefits of CMHC Mortgage Insurance

Enables buyers to access homeownership sooner with a lower down payment.
May help secure competitive rates.
Spreads risk for lenders, leading to more stability in the Canadian mortgage market.

See a full breakdown in CMHC coverage and benefits.

Common Scenarios Where CMHC Applies

First-time homebuyers with limited savings.
Those upgrading to a more expensive property and unable to put 20% down.
Buyers in hot real estate markets with high purchase prices close to the $1.5 million cap.

Explore strategies for new buyers in our first-time buyer’s guide.

Frequently Asked Questions About CMHC Mortgages

Does this insurance protect the buyer or lender?
Can you reduce your premium?
Is it better to save for 20% down before buying?

Find answers and more in the CMHC mortgage insurance FAQ.

Bringing It All Together

A CMHC mortgage opens the door to homeownership for many Canadians by making it possible to buy with a small down payment. While there are extra costs involved, the advantages of faster homeownership and access to good financing options often outweigh the premiums.

To learn more, use our insurance calculator, review current rules, see application steps, check out qualification criteria, and compare all mortgage insurance strategies and coverage benefits. New to the process? Start with our first-time buyer’s guide.