If you’re buying a home in Canada with less than 20% down, CMHC mortgage default insurance isn’t optional — it’s mandatory. But beyond being a regulatory requirement, understanding exactly what it costs, how it’s calculated, and why it paradoxically gives you access to lower mortgage rates is essential for any buyer in 2026. This guide breaks down everything.
What Is CMHC Mortgage Insurance?
CMHC (Canada Mortgage and Housing Corporation) mortgage insurance protects the lender — not the borrower — in case of default. It is required by law when a borrower puts less than 20% down on a home purchase under $1,000,000. Two private insurers compete with CMHC: Sagen (formerly Genworth Canada) and Canada Guaranty. All three charge identical premiums under federally regulated guidelines.
CMHC Premium Rates 2026
| Down Payment | LTV Ratio | CMHC Premium (% of Insured Mortgage) |
|---|---|---|
| 5% | 95% | 4.00% |
| 10% | 90% | 3.10% |
| 15% | 85% | 2.80% |
| 19.99% | 80.01% | 2.80% |
Real Cost Examples at Common Purchase Prices
| Purchase Price | 5% Down | CMHC Premium (4%) | Total Insured Mortgage |
|---|---|---|---|
| $500,000 | $25,000 | $19,000 | $494,000 |
| $700,000 | $45,000 | $26,600 | $681,600 |
| $900,000 | $65,000 | $33,400 | $868,400 |
Premium is added to the mortgage balance, not paid upfront. PST applies on the premium in some provinces (not Ontario). The premium amount is then amortized over your mortgage term.
The Counterintuitive Benefit: Insured = Lower Rate
Here’s what most buyers don’t realize: because CMHC insurance eliminates the lender’s default risk entirely, insured mortgages actually receive lower interest rates than uninsured mortgages (20%+ down). The insured rate advantage is typically 0.10%–0.20% — partially or fully offsetting the cost of the insurance premium over the full amortization period.
2024 Rule Change: 30-Year Amortization for Insured Mortgages
Effective August 2024, first-time homebuyers and all buyers of new construction can access 30-year amortization on insured mortgages — up from the previous 25-year cap. This reduces monthly payments meaningfully:
| Mortgage Balance | 25-Year Payment (4.04%) | 30-Year Payment (4.04%) | Monthly Savings |
|---|---|---|---|
| $494,000 | $2,605/mo | $2,351/mo | $254/mo |
| $681,600 | $3,592/mo | $3,241/mo | $351/mo |
Use the free CMHC premium and payment calculator at mrates.ca to model your exact costs.