Canadian mortgages with less than 20% down payment require mortgage default insurance, typically from CMHC, Sagen, or Canada Guaranty. The premium is calculated as a percentage of the mortgage amount based on loan-to-value (LTV) ratio. Premiums range from 0.6% at 65% LTV up to 4.0% at 95% LTV. The premium is added to the mortgage principal and amortized over the life of the loan, not paid upfront.
2026 CMHC premium schedule
| Loan-to-value (LTV) ratio | Down payment percentage | Premium rate |
|---|---|---|
| Up to 65% | 35% or more | 0.60% |
| 65.01% to 75% | 25% to 34.99% | 1.70% |
| 75.01% to 80% | 20% to 24.99% | 2.40% |
| 80.01% to 85% | 15% to 19.99% | 2.80% |
| 85.01% to 90% | 10% to 14.99% | 3.10% |
| 90.01% to 95% | 5% to 9.99% | 4.00% |
| 90.01% to 95% (non-traditional down payment) | 5% to 9.99% (gifted, borrowed) | 4.50% |
Sagen and Canada Guaranty premiums are virtually identical to CMHC. Lenders typically choose the insurer based on internal preferences, not borrower-facing pricing.
Surcharges
| Surcharge | Amount | When it applies |
|---|---|---|
| 30-year amortization (extended amort) | +0.20% | First-time buyers and new construction with 30-year amortization |
| Multi-unit (2-4 units, owner-occupied) | varies (typically +0.25% to +0.50%) | Properties with rental units |
| Vacation property | varies (premium tier may differ) | Second home or vacation property |
Worked example
A first-time buyer purchasing a $700,000 home with 10% down ($70,000):
- Mortgage before insurance: $630,000 (90% LTV)
- Premium rate at 90% LTV: 3.10%
- Premium amount: $630,000 × 3.10% = $19,530
- Total mortgage with premium: $649,530
- If 30-year amortization (eligible as first-time buyer): premium increases to 3.30%, premium becomes $20,790
Insured price cap
Mortgage default insurance is available only on properties priced up to $1,500,000 (raised from $1,000,000 in late 2024 / early 2025). Properties above $1,500,000 require 20%+ down payment regardless of buyer profile and cannot be insured. This affects markets like Toronto and Vancouver where homes commonly exceed the cap.
Down payment minimums
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% of purchase price |
| $500,000 to $1,500,000 | 5% of first $500,000 plus 10% of remainder |
| Over $1,500,000 | 20% of purchase price (no insurance available) |
A $750,000 home requires minimum down payment of: $25,000 (5% of $500,000) + $25,000 (10% of $250,000) = $50,000 (6.67% of purchase price).
How the premium is paid
The insurance premium is added to the mortgage principal and amortized over the life of the loan. Borrowers do not pay it upfront in cash. The premium effectively increases the monthly mortgage payment slightly because the principal is larger. PST applies to the premium in Ontario, Quebec, Saskatchewan, and Manitoba and is paid as a one-time cost at closing.
Insured vs uninsured: pros and cons
Insured mortgages (less than 20% down) have lower contract rates than uninsured because the default insurance reduces lender risk. The lower rate often offsets a meaningful portion of the insurance premium over the term of the loan. Borrowers who can afford 20%+ down avoid the premium and have more flexibility but pay a higher rate.
The break-even point depends on rate spread between insured and uninsured, premium percentage, and how long the borrower stays in the home. For most first-time buyers with 10% to 15% down, taking the insurance is the rational choice.
Frequently asked questions
- What is the CMHC premium rate?
- Premium ranges from 0.60% at 65% LTV up to 4.00% at 95% LTV. The exact tier is set by your loan-to-value ratio at origination.
- What is the price cap for insured mortgages?
- Insured mortgages are available only on properties priced up to $1,500,000. Above that price, a minimum 20% down payment and uninsured mortgage are required.
- Is the CMHC premium paid upfront?
- No. The premium is added to the mortgage principal and amortized over the life of the loan. PST in Ontario, Quebec, Saskatchewan, and Manitoba is paid one-time at closing.
- What is the minimum down payment in Canada?
- 5% on the first $500,000 of purchase price, 10% on the remainder up to $1,500,000, and 20% on amounts above $1,500,000.
- Is there a surcharge for 30-year amortization?
- Yes. First-time buyers and new construction qualifying for 30-year amortization pay an additional 0.20% premium.
- Are non-traditional down payments more expensive?
- Yes. A gifted or borrowed down payment at 95% LTV carries a 4.50% premium versus 4.00% for traditional savings.
- Can I avoid mortgage insurance with 19% down?
- No. Insurance is required on any mortgage with less than 20% down, including 19.99%. Bumping to 20% removes the requirement entirely.