What is CMHC Mortgage Insurance & How is it Calculated?
A comprehensive guide to Canadian mortgage default insurance, premium tiers, and home buyer regulations.
Written by the CalcUni Editorial Team | Updated: June 2026
If you are buying a home in Canada with a down payment of less than 20%, you will have to pay for mortgage default insurance. Most commonly provided by the Canada Mortgage and Housing Corporation (CMHC), this insurance is a mandatory fee that protects lenders in case you default on your mortgage payments.
1. Why Does CMHC Insurance Exist?
CMHC insurance does not protect you, the borrower. Instead, it protects your bank or mortgage lender. However, it benefits borrowers because it allows financial institutions to offer low-interest mortgage loans to buyers who don't have a massive 20% down payment, making homeownership accessible to first-time buyers.
2. Canada's Minimum Down Payment Rules
To qualify for a mortgage in Canada, you must meet the statutory minimum down payment thresholds based on the home purchase price:
- Up to $500,000: 5% of the purchase price.
- From $500,000 to $999,999: 5% on the first $500,000, plus 10% on the portion above $500,000.
- $1,000,000 and above: 20% of the purchase price (default insurance is not available).
3. How is the CMHC Premium Calculated?
The premium is calculated as a percentage of your total loan amount (purchase price minus your down payment). The percentage rate depends on your Loan-to-Value (LTV) ratio:
| Down Payment % | Loan-to-Value (LTV) Ratio | CMHC Premium Rate |
|---|---|---|
| 5.0% to 9.99% | 90.01% to 95.0% | 4.00% |
| 10.0% to 14.99% | 85.01% to 90.0% | 3.10% |
| 15.0% to 19.99% | 80.01% to 85.0% | 2.80% |
| 20.0% or more | 80.0% or less | 0.00% (Not Required) |
4. Example Calculation
Suppose you purchase a home for $600,000 and put down a 10% down payment of $60,000.
- Your base loan amount is: $600,000 - $60,000 = $540,000.
- Your down payment is exactly 10%, meaning your premium rate tier is 3.10%.
- Your CMHC premium is: $540,000 × 3.10% = $16,740.
- Your total mortgage principal amount becomes: $540,000 + $16,740 = $556,740.
5. Planning and Tools
To calculate your exact fees, use our dedicated CMHC Insurance Calculator. Once you know your total loan principal including insurance, you can check monthly payments using the Mortgage Calculator and determine whether you satisfy lender income thresholds under the federal Mortgage Stress Test Calculator.