CMHC Mortgage Insurance Premium Calculator
Calculate your CMHC mortgage default insurance premium based on your down payment and purchase price
Your CMHC Insurance Results
Comprehensive Guide to CMHC Mortgage Insurance Rates in Canada (2024)
The Canada Mortgage and Housing Corporation (CMHC) plays a crucial role in Canada’s housing market by providing mortgage loan insurance to lenders. This insurance protects lenders against mortgage default, allowing them to offer mortgages with lower down payments to qualified homebuyers.
What is CMHC Mortgage Insurance?
CMHC mortgage insurance, also known as mortgage default insurance, is required for all mortgages with down payments between 5% and 19.99% of the purchase price. This insurance:
- Protects lenders in case of borrower default
- Enables homebuyers to purchase homes with smaller down payments
- Helps stabilize the housing market
- Is typically added to the mortgage amount and paid over the life of the loan
How CMHC Insurance Premiums Are Calculated
CMHC insurance premiums are calculated based on two main factors:
- Loan-to-Value (LTV) Ratio: The percentage of the property value that’s being mortgaged
- Mortgage Amount: The total amount being borrowed
| Down Payment Percentage | Loan-to-Value (LTV) Ratio | CMHC Insurance Premium |
|---|---|---|
| 5% – 9.99% | 90.01% – 95% | 4.00% |
| 10% – 14.99% | 85.01% – 90% | 3.10% |
| 15% – 19.99% | 80.01% – 85% | 2.80% |
For example, on a $500,000 home with a 5% down payment ($25,000), the mortgage amount would be $475,000. With a 4% CMHC premium, the insurance cost would be $19,000 ($475,000 × 4%), bringing the total mortgage to $494,000.
When is CMHC Insurance Required?
CMHC mortgage insurance is mandatory in the following situations:
- Down payment is less than 20% of the purchase price
- Mortgage is for an owner-occupied property (1-4 units)
- Purchase price is below $1,000,000
- Amortization period is 25 years or less (for down payments under 20%)
Note that for down payments of 20% or more, mortgage default insurance is not required, though some lenders may still require it for certain property types or borrower profiles.
CMHC vs. Other Mortgage Insurers in Canada
While CMHC is the most well-known mortgage insurer in Canada, there are two other providers:
- Sagen (formerly Genworth Canada): Offers similar products with slightly different premium structures
- Canada Guaranty: Another private mortgage insurer with competitive rates
| Insurer | 5-9.99% Down | 10-14.99% Down | 15-19.99% Down | Max Purchase Price |
|---|---|---|---|---|
| CMHC | 4.00% | 3.10% | 2.80% | $1,000,000 |
| Sagen | 4.00% | 3.10% | 2.80% | $1,000,000 |
| Canada Guaranty | 4.00% | 3.10% | 2.80% | $1,000,000 |
While the premium rates are similar across providers, there may be differences in underwriting guidelines, approval processes, and additional features. Your lender will typically choose the insurer based on their relationships and the specific details of your application.
How to Reduce Your CMHC Insurance Costs
There are several strategies to minimize your CMHC insurance premiums:
- Increase Your Down Payment: Even increasing from 9.9% to 10% can reduce your premium from 4% to 3.1%
- Improve Your Credit Score: Better credit may help you qualify for better mortgage rates, offsetting insurance costs
- Consider a Shorter Amortization: While this increases monthly payments, it reduces total interest costs
- Purchase a Less Expensive Home: Lower purchase price means lower insurance premiums
- Wait Until You Have 20% Down: This eliminates the need for mortgage insurance entirely
CMHC Insurance for Different Property Types
The rules for CMHC insurance vary depending on the property type:
- Owner-Occupied Properties: Eligible for standard CMHC insurance with down payments as low as 5%
- Rental Properties: Require at least 20% down payment (no CMHC insurance available for down payments under 20%)
- Second Homes: May qualify for CMHC insurance but often require higher down payments (typically 10-20%)
- Multi-Unit Properties (2-4 units): Eligible for CMHC insurance with 5% down if owner-occupied
- Properties Over $1M: Not eligible for CMHC insurance regardless of down payment
Recent Changes to CMHC Policies (2023-2024)
CMHC regularly updates its policies to reflect market conditions. Recent changes include:
- Stricter Debt Service Ratios: Maximum Gross Debt Service (GDS) ratio reduced to 35% and Total Debt Service (TDS) ratio to 42%
- Credit Score Requirements: Minimum credit score of 680 for at least one borrower
- Down Payment Sources: More scrutiny on down payment sources to prevent money laundering
- Non-Traditional Down Payments: Limits on borrowed down payments and gifts
These changes aim to reduce risk in the housing market while still making homeownership accessible to qualified buyers.
How CMHC Insurance Affects Your Monthly Payments
The CMHC insurance premium is typically added to your mortgage amount, which affects your monthly payments in two ways:
- Increased Mortgage Principal: The premium becomes part of your mortgage balance
For example, on a $400,000 mortgage with a 3% CMHC premium ($12,000), your new mortgage amount becomes $412,000. Over a 25-year amortization at 5% interest, this would add approximately $70 to your monthly payment.
Alternatives to CMHC Insurance
If you want to avoid CMHC insurance, consider these alternatives:
- Save for a 20% Down Payment: The most straightforward way to avoid mortgage insurance
- Piggyback Mortgage: Combine a first mortgage (80% LTV) with a second mortgage (10-15% LTV) and your down payment (5-10%)
- Lender-Paid Insurance: Some lenders offer programs where they pay the insurance in exchange for a slightly higher interest rate
- Credit Union Mortgages: Some credit unions offer mortgages with less than 20% down without CMHC insurance
- Family Assistance Programs: Some provinces offer programs to help first-time buyers with down payments
Common Misconceptions About CMHC Insurance
There are several myths about CMHC insurance that persist:
- “CMHC insurance protects the homeowner”: It actually protects the lender, not the borrower
- “You can cancel CMHC insurance later”: Unlike private mortgage insurance in the U.S., CMHC insurance cannot be canceled once added to your mortgage
- “All mortgages require CMHC insurance”: Only mortgages with less than 20% down require it
- “CMHC insurance is a one-time fee”: It’s typically added to your mortgage and paid with interest over the life of the loan
- “CMHC insurance rates are negotiable”: Rates are set by CMHC and non-negotiable
CMHC Insurance for First-Time Homebuyers
First-time homebuyers often have the most questions about CMHC insurance. Here’s what you need to know:
- Minimum Down Payment: 5% for the first $500,000, 10% for the portion above $500,000
- First-Time Home Buyer Incentive: CMHC offers a shared equity mortgage that can reduce your mortgage amount
- RRSP Home Buyers’ Plan: Allows first-time buyers to withdraw up to $35,000 from RRSPs for down payment
- Land Transfer Tax Rebates: Many provinces offer rebates for first-time buyers
The CMHC website provides detailed information about programs specifically designed for first-time homebuyers.
The Impact of CMHC Insurance on Mortgage Approval
CMHC insurance affects mortgage approval in several ways:
- Easier Approval: Lenders are more likely to approve mortgages with CMHC insurance due to reduced risk
- Better Rates: Insured mortgages often qualify for lower interest rates
- Stricter Qualification: CMHC has its own qualification criteria in addition to the lender’s
- Debt Ratios: The insurance premium increases your mortgage amount, affecting your debt service ratios
When applying for a mortgage with less than 20% down, you’ll need to qualify under both the lender’s guidelines and CMHC’s requirements.
CMHC Insurance and Mortgage Renewals
When your mortgage comes up for renewal, the CMHC insurance works as follows:
- If you stay with the same lender, the insurance remains in place
- If you switch lenders, the new lender may require new insurance
- The insurance premium is not refundable if you pay off your mortgage early
- If your home value has increased significantly, you might qualify to remove insurance at renewal
It’s important to shop around at renewal time, as different lenders may have different policies regarding CMHC insurance on transferred mortgages.
Tax Implications of CMHC Insurance
The tax treatment of CMHC insurance premiums is as follows:
- For owner-occupied properties, CMHC premiums are not tax-deductible
- For rental properties, the premium may be added to the cost of the property and depreciated over time
- If you sell your home, the insurance cost is not typically added to your adjusted cost base for capital gains calculations
Always consult with a tax professional for advice specific to your situation, as tax laws can change and have nuances depending on your individual circumstances.
Important Disclaimer: This calculator provides estimates based on current CMHC guidelines. Actual premiums may vary based on additional factors considered by your lender and CMHC. For official information, always consult the CMHC website or speak with a mortgage professional. The information provided is not financial advice and should not be relied upon as such.
Additional Resources
For more information about CMHC mortgage insurance, consider these authoritative sources: