CMHC Mortgage Insurance in Canada (2025): How It Works and What You’ll Pay

• What is CMHC Mortgage Insurance?

• Why It Exists (and Who Needs It)

• Real-Life Example: Priya’s First Condo Purchase

• When Is CMHC Insurance Mandatory?

• How Much Will You Pay? (Premiums Explained)

• CMHC Insurance Calculator: Behind the Numbers

• How You Pay the CMHC Premium

• Can You Get a Refund or Discount?

• What If You Switch Homes? (CMHC Portability)

• Final Advice from a Mortgage Expert

If you’re buying a home in Canada with less than 20% down, you’ve probably heard of CMHC mortgage insurance. But what exactly is it, why do you need it, and how much will it cost you in 2025? This guide breaks it all down in plain English, so you can move forward with your home purchase confidently — no financial jargon needed.

What is CMHC Mortgage Insurance?

CMHC mortgage insurance — also known as mortgage default insurance — protects your lender if you can’t repay your loan. It’s not for your benefit directly, but it helps you buy a home with as little as 5% down. The Canada Mortgage and Housing Corporation (CMHC) is the government-backed agency that provides this insurance. There are also private insurers like Sagen and Canada Guaranty, but CMHC is the most well-known.

Why It Exists (and Who Needs It)

Lenders take a bigger risk when they loan money to people with small down payments. That’s where CMHC insurance comes in — it reduces the lender’s risk. In return, you get access to better mortgage rates and the ability to buy a home sooner, even if you haven’t saved up a big down payment. It’s mandatory for most borrowers putting down less than 20% on a property under $1 million.

Real-Life Example: Priya’s First Condo Purchase

Priya, a 29-year-old in Mississauga, bought her first condo in early 2025 for $540,000. She had saved $35,000 — about 6.5% down. Because her down payment was under 20%, her mortgage required CMHC insurance. Her lender added a one-time premium of $16,092 to her mortgage, increasing her monthly payments slightly. But without CMHC, she wouldn’t have been able to buy that condo at all — she’d have had to wait years to save more.

When Is CMHC Insurance Mandatory?

CMHC insurance is required if:
• Your down payment is under 20% of the purchase price
• The property is under $1 million
• The amortization is 25 years or less
• You meet CMHC’s debt servicing ratios and credit score criteria (at least 600 credit score)

Homes over $1 million don’t qualify for CMHC — you’ll need at least 20% down in that case, with no exceptions.

How Much Will You Pay? (Premiums Explained)

The premium depends on how much you put down:
• 5% to 9.99% down → 4.00% of mortgage amount
• 10% to 14.99% down → 3.10%
• 15% to 19.99% down → 2.80%

The smaller your down payment, the higher your premium. This premium can be paid upfront, but most Canadians roll it into their mortgage so they don’t need to pay it out of pocket.

CMHC Insurance Calculator: Behind the Numbers

CMHC’s online calculator helps you estimate your premium based on your purchase price and down payment. For example, on a $500,000 home with 5% down, you’d pay roughly $19,000 in insurance, which gets added to your mortgage principal. This affects your monthly payments slightly, but it’s usually worth it to enter the market sooner.

How You Pay the CMHC Premium

Most borrowers don’t pay CMHC premiums upfront. Instead, the premium is added to your mortgage and repaid over time as part of your monthly payments. It’s one of those silent costs — you don’t feel it directly, but it’s built into your loan. Some people choose to pay it upfront to reduce their interest charges — especially if they’re expecting a financial windfall soon.

Can You Get a Refund or Discount?

Yes, in certain cases. If you took a CMHC-insured mortgage and then bought an energy-efficient home or completed qualifying upgrades, you might be eligible for a partial premium refund — up to 25%. Also, if you switch homes within a certain timeframe, you may be able to transfer your CMHC insurance to the new home without paying again. This is called ‘portability’.

What If You Switch Homes? (CMHC Portability)

CMHC insurance is sometimes portable — meaning you can transfer it to a new mortgage without paying another premium. This applies when you buy a new home within a set period (usually 6 months to 2 years), and the new mortgage amount doesn’t exceed your original one. It helps you avoid paying twice for the same coverage. Always confirm eligibility before making your move.

Final Advice from a Mortgage Expert

CMHC mortgage insurance might feel like just another fee, but it’s what makes homeownership possible for many Canadians. Yes, it increases your mortgage slightly — but it also opens the door to buying with less than 20% down. Use the CMHC calculator to estimate your costs, plan for the premium in your budget, and talk to a broker about portability or refund options. The more you understand it, the more confident you’ll feel stepping into your first home — even with a small down payment.