What Is CMHC Mortgage Default Insurance? (2026 Guide)
CMHC mortgage default insurance lets you buy with less than 20% down. Here's what it is, who pays, how the premium is calculated, and how to avoid it if you want to.
CMHC mortgage default insurance lets you buy with less than 20% down. Here's what it is, who pays, how the premium is calculated, and how to avoid it if you want to.
If you're buying with less than 20% down, you'll run into "CMHC insurance" — and it's widely misunderstood. It doesn't protect you, yet you pay for it. But it's also the thing that makes low-down-payment homeownership possible. Here's exactly what it is and how it works in 2026.
The short answer
Mortgage default insurance (provided by CMHC, Sagen, or Canada Guaranty) is required when your down payment is under 20% on a home priced up to $1.5 million. It protects the lender if you default — but it lets you buy sooner with as little as 5% down. The premium is a percentage of your mortgage, added to the loan, and rises as your down payment shrinks. Estimate your premium.
Who it protects (and who pays)
The insurance protects the lender against losses if a borrower defaults. The borrower pays the premium — which feels counterintuitive — but the benefit to you is real: because the lender's risk is covered, lenders will approve low-down-payment mortgages and often at better rates than they otherwise could. In effect, you're buying access to homeownership years earlier than a 20% requirement would allow.
How the premium is calculated
The premium is a percentage of your mortgage amount that increases as your down payment gets smaller — the less you put down, the higher the risk and the higher the premium. It's typically added to your mortgage and paid off over time rather than upfront (though in Ontario the PST on the premium is due in cash at closing — see closing costs). Use the CMHC calculator to see your exact figure.
When it's required
- Down payment under 20% on a home priced up to $1.5 million — required.
- Down payment of 20%+ — not required (you have a "conventional" mortgage).
- Homes over $1.5 million — can't be insured, so 20% down is the minimum.
- Rental properties (non-owner-occupied) generally aren't eligible — see financing a rental.
Full down payment tiers are in how much down payment you need.
Should you avoid it?
Putting 20% down avoids the premium and lowers your borrowing — but waiting years to save 20% while prices and rent continue isn't always worth it. For many buyers, paying the premium to get in with 5–10% down and start building equity beats waiting. It's a genuine trade-off; a broker can model both paths. There's also an upside: an insured mortgage often qualifies for slightly better rates than an uninsured one at the same down payment level.
Frequently asked questions
What is CMHC mortgage insurance?
Mortgage default insurance required when you put down less than 20% (on homes up to $1.5M). It protects the lender against default and lets you buy with as little as 5% down.
Who pays for CMHC insurance?
The borrower pays the premium, even though it protects the lender — the benefit to you is access to a low-down-payment mortgage, often at a competitive rate.
How much is the premium?
A percentage of your mortgage that rises as your down payment falls. It's usually added to the loan; in Ontario the PST on it is due in cash at closing. The CMHC calculator gives your exact figure.
How do I avoid CMHC insurance?
Put down 20% or more. Whether that's worth waiting for depends on your market and savings — often buying sooner with the premium builds more equity than waiting to hit 20%.
Buying with less than 20% down? Talk to us or estimate your premium — we'll show whether paying it to buy now beats waiting to save 20%.
Mortgage content produced by Mortgage Squad Advisors' team of FSRA-licensed mortgage advisors and reviewed under the supervision of the brokerage's Principal Broker (FSRA Brokerage #13737) before publication.