CMHC Default Mortgage Insurance

When is CMHC insurance required?

Default mortgage insurance is mandatory in Canada whenever the down payment is less than 20% of the purchase price. It protects the lender if the borrower defaults. Three insurers operate in this market: CMHC (the Crown corporation), Sagen, and Canada Guaranty — all subject to the same federal rules.

Above 20% down, the loan is “conventional” and no insurance is required. The borrower may still face an OSFI stress test (federally-regulated lenders apply it to all uninsured mortgages) — see OSFI stress test.

Three named-submarket worked examples

How the premium math, the $1.5M cap, and the 30-year amortization carve-out actually land in transactions BC buyers run into in 2026. All three submarkets sit inside the Lower Mainland.

Premium tiers (% of loan amount)

Tiers based on standard CMHC homeownership program. Premium is added to the mortgage principal and amortized over the loan term. PST on the premium (7% in BC) is paid in cash on closing — that’s the line your pre-approval letter doesn’t mention.

Frequently asked questions

• When is CMHC default mortgage insurance mandatory?

  Whenever the down payment is less than 20% of the purchase price, federally-regulated lenders REQUIRE default mortgage insurance to mitigate their risk. Three insurers offer it: CMHC (the Crown corporation), Sagen, and Canada Guaranty. The premium is paid to the insurer; lenders pass the cost to the borrower (typically financed into the mortgage). Above 20% down, the loan is "conventional" and no insurance is required. Brokers will quote you the headline premium without flagging the PST line; ask for both before you sign the commitment.

• What is the maximum purchase price eligible for CMHC insurance?

  Effective December 15, 2024, the maximum eligible purchase price was raised from $1,000,000 to $1,500,000 — the most material loosening of the high-ratio mortgage market in over a decade. Below the cap, buyers can put as little as 5% down on the first $500,000 plus 10% down on the portion between $500,000 and $1,500,000. Above $1,500,000, conventional 20%-down financing is required regardless of borrower category. The cliff is sharp: at $1,500,001 your minimum down payment jumps from $125,000 to $300,000+ — plan offers carefully if you're buying in that band.

• How is the CMHC premium calculated?

  Premium is a percentage of the loan amount, scaled by loan-to-value (LTV) ratio. At 95% LTV (5% down): 4.00%. At 90% LTV (10% down): 3.10%. At 85% LTV (15% down): 2.80%. The premium is added to the mortgage principal and amortized over the loan term. PST on the premium (7% in BC) is NOT financed — it must be paid in cash on closing day. Worked example matching the Willoughby townhouse below ($850K purchase, 5% down, $807,500 loan at the 95.01-90% LTV tier): premium = 4.00% × $807,500 = $32,300 (financed); PST = 7% × $32,300 = $2,261 (cash on closing). The PST line is the surprise — pre-approval letters quote the financed premium and stay silent on the cash piece.

• Who qualifies for 30-year amortization?

  Effective December 15, 2024, CMHC-insured mortgages permit a 30-year amortization (up from the standard 25-year max) for two specific borrower categories: (1) all first-time home buyers, regardless of property type; (2) any buyer (first-time or repeat) purchasing newly constructed housing. The longer amortization reduces the monthly P&I payment by roughly 8-12% versus a 25-year amortization at the same rate, improving qualifying capacity at the cost of more lifetime interest paid. For most retail FTHBs in Willoughby and Fort Langley, the 30-year option is what makes the deal work — but it lapses to 25 years if you're a repeat buyer of a resale unit.

• Does the OSFI stress test apply to CMHC-insured mortgages?

  Yes. CMHC applies the same higher-of stress test as OSFI Guideline B-20: borrowers must qualify at the GREATER of (a) the contract rate + 2 percentage points, or (b) the Bank of Canada qualifying rate (5.25%). For example: if your contract rate is 5.0%, you qualify at 7.0% (5 + 2). If your contract rate is 2.5%, you qualify at 5.25% (the floor). Effective November 21, 2024, federally-regulated lenders may renew an existing uninsured mortgage with the same lender WITHOUT re-applying the stress test — but this does NOT apply to CMHC-insured renewals or new originations. The stress test is the binding constraint on most buyers; the down payment is rarely the gate.

• Can I get the CMHC premium back if I refinance / break the mortgage?

  No. The CMHC premium is non-refundable, even if you sell, refinance, or break the mortgage early. This is one reason 20%+ down (no insurance) is preferred when feasible — but the trade-off is that the down-payment cash could otherwise earn returns. For most first-time buyers, the math favours buying sooner with a higher LTV than waiting years to save 20%. The right way to frame it: the premium is a one-time fee for time-in-market, not a refundable deposit.

• Does the CMHC premium count toward the down payment "minimum"?

  No. The minimum down payment requirement (5% on first $500K, 10% on $500K-$1.5M) is calculated on the PURCHASE PRICE, not the loan amount. The CMHC premium is added on top of the loan after the down-payment requirement is met. Example: $1M purchase, $50K (5%) down on first $500K + $50K (10%) down on the portion above = $100K total down. Loan = $900K. Premium at 95.01-90% LTV (4.00%) = $36K. Final mortgage principal = $936K. The amortization runs on the post-premium principal, so your monthly payment reflects the full $936K, not the $900K you borrowed.

Related

• · BC closing costs — full reference
• · OSFI B-20 stress test — full reference
• · Buyer due-diligence checklist
• · CMHC insurance cap glossary entry
• · 30-year amortization eligibility
• · OSFI B-20 stress test