In short
The premium is a percentage of the loan, usually added to your mortgage. It's offered by CMHC, Sagen and Canada Guaranty.
It costs money, but it lets you buy with as little as 5% down instead of waiting years to save 20%.
How it works
When you put down less than 20%, federally regulated lenders must insure the mortgage against default. People call it CMHC insurance, but it can come from CMHC or a private insurer such as Sagen or Canada Guaranty.
If you stop paying and the home sells for less than you owe, the insurer covers the lender's loss. It does not protect you, your equity or your credit.
Insured mortgages are only available on homes priced under $1.5 million, and the home must be owner occupied, by you or certain close family members.
Your lender arranges the insurance as part of your mortgage approval, so you don't apply to CMHC yourself.
What the premium costs
The premium is a one-time charge calculated as a percentage of your mortgage. On CMHC's published schedule for a purchase, it's 4.00% of the loan with 5% to 9.99% down, 3.10% with 10% to 14.99% down, and 2.80% with 15% to 19.99% down.
The premium is usually added to your mortgage, so you pay it off over time along with interest. Since December 15, 2024, first-time buyers and buyers of new builds can choose a 30-year amortization on an insured mortgage, and CMHC adds a 0.20% surcharge to the premium for amortizations beyond 25 years.
Because the premium is a percentage of the loan, every extra dollar of down payment lowers both the mortgage and the premium. Crossing a threshold, such as moving from 9.99% down to 10%, drops the rate itself.
The Ontario sales tax you pay in cash
Ontario charges 8% provincial sales tax on the premium. Unlike the premium itself, this tax can't be added to the mortgage. Your lawyer normally collects it from you before closing, so count it in your closing cost budget.
If you move or switch lenders later, some insured mortgages can be ported or transferred without paying a full new premium. Ask your lender how its rules work before you break a mortgage early.
Common questions about CMHC insurance
How much is CMHC insurance?
It's 2.80% to 4.00% of your mortgage on a standard purchase, depending on your down payment. CMHC charges 4.00% with 5% to 9.99% down, 3.10% with 10% to 14.99% down and 2.80% with 15% to 19.99% down. A 0.20% surcharge applies to amortizations over 25 years.
Is CMHC insurance mandatory in Canada?
Yes, it's required when your down payment is less than 20% of the purchase price. Federally regulated lenders must insure these high-ratio mortgages. With 20% or more down, insurance is generally not required, though a lender may still choose to insure the loan at its own cost.
Do you pay tax on CMHC insurance in Ontario?
Yes, Ontario applies 8% provincial sales tax to the mortgage insurance premium. The tax can't be rolled into your mortgage, so you pay it in cash, normally through your lawyer at closing. On a $13,950 premium, that's $1,116. Your lawyer will include it in the funds you bring to closing.
Does CMHC insurance protect me if I can't pay my mortgage?
No, it protects the lender, not the borrower. If you default, the insurer covers the lender's loss, and you can still owe money and face damage to your credit. If you want protection for yourself, ask about separate mortgage life or disability coverage.
Sources
General information for Ontario, updated October 2026. Not legal, tax or mortgage advice. Rules change, so confirm with your lawyer, lender or the source above before you rely on it.