In Manitoba, Ontario, Quebec and Saskatchewan, you must also pay provincial sales tax (PST) on the insurance premium—7%, 8%, 9.975% and 6% respectively.
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Note: Provincial Sales Tax is only applied to Manitoba, Ontario, Quebec and Saskatchewan
Mortgage default insurance, also known as Canada Mortgage and Housing Corporation (CMHC) Insurance, protects your mortgage lender in the case of default.
Under Office of the Superintendent of Financial Institutions (OSFI) regulations, you are required to purchase CMHC insurance if your down payment is below 20%.
You may be ineligible for CMHC insurance if:
In these cases, you must make a down payment of 20% or higher.
Your CMHC insurance cost is calculated as a percentage of your purchase price. The exact percentage depends on your down payment amount, and decreases for larger down payments.
Since March 17, 2017, the following CMHC premiums apply in most situations:
|Down Payment (% of Purchase Price)||5–9.99%||10–14.99%||15–19.99%|
|CMHC Insurance (% of Mortgage Amount)||4.00%||3.10%||2.80%|
Your lender is actually the party responsible for paying CMHC insurance costs. In the majority of cases, your lender will pass these costs down to you by adding the CMHC insurance premium to your mortgage loan amount. This will slightly increase your monthly or bi-weekly payment.
In some cases, your lender may allow you to pay CMHC insurance costs as a lump-sum, or not pass down the cost to you at all. Contact your lender for more details.
A mortgage with a down payment below 20% is known as a high-ratio mortgage. The term ratio refers to the size of your mortgage loan amount as a percentage of your total purchase price.
All high-ratio mortgages require the purchase of CMHC insurance, since they generally carry a higher risk of default.