Financing costs
Mortgage default insurance premium
By Bo Yu, Broker, Right at Home Realty, Brokerage · Verified/updated August 2026
If your down payment is less than 20%, your mortgage has to be insured against default. The insurance protects the lender, not you, but you pay the premium.
Three insurers write it in Canada: CMHC (the federal Crown corporation), Sagen and Canada Guaranty. Your lender chooses the insurer; their standard premium schedules track each other closely. "CMHC insurance" is shorthand people use for all three, but the policy on your file may be with any of them.
The premium itself is normally added to your mortgage and paid off over the amortization. The Ontario 8% tax on that premium is not — that is cash at closing, covered on its own page.
- Who charges it
- CMHC, Sagen or Canada Guaranty, through your lender.
- Who normally pays
- The borrower.
- When it's paid
- At closing, then repaid monthly as part of the mortgage if it is financed.
- Cash or financed
- Financed. The premium is normally rolled into the loan; only the 8% Ontario tax on it must be paid in cash.
- Typical range
- 2.80%–4.00% of the mortgage amount
How it's calculated — and why it varies
The premium is a percentage of the loan, set by your loan-to-value ratio (the mortgage divided by the purchase price). CMHC's current standard homeowner schedule:
- Up to 65% LTV: 0.60%
- 65.01%–75%: 1.70%
- 75.01%–80%: 2.40%
- 80.01%–85%: 2.80%
- 85.01%–90%: 3.10%
- 90.01%–95%: 4.00% (4.50% where the down payment comes from non-traditional or borrowed sources)
- Add a 0.20% surcharge for any amortization longer than 25 years.
- Insured mortgages are capped at a $1,500,000 purchase price, with minimum down payments of 5% on the first $500,000 and 10% on the portion between $500,000 and $1,500,000.
- 30-year amortizations are available on insured mortgages to first-time buyers and to buyers of newly built homes.
Exemptions, refunds and when it doesn't apply
- Put 20% or more down and there is no premium at all.
- Above a $1,500,000 purchase price, insured financing is not available — you need at least 20% down.
- Premiums are non-refundable, but partial rebates exist on some energy-efficient-home programs; ask your lender.
- Sagen and Canada Guaranty publish their own schedules. Confirm your actual premium on your mortgage commitment rather than assuming the CMHC table.
- The premium is not a fee your broker or lawyer charges, and it is not the same as mortgage life insurance, which is optional coverage on your life.
A real Ottawa example
A $650,000 home in Barrhaven with $40,000 down: the mortgage is $610,000, so the loan-to-value is 93.8% and the premium rate is 4.00% — $24,400.
That $24,400 is added to the mortgage, so you actually borrow $634,400 and your payment is calculated on that. Separately, 8% Ontario tax on the premium — $1,952 — has to be in your lawyer's trust account on closing day.
How this shows up in the calculator
The calculator applies these rates automatically from your down payment, adds the premium to the loan before calculating your payment, and shows the amount in the note under "Cash needed at closing" so you can see it is financed rather than paid in cash. The 8% tax appears as its own cash row.
Open the calculatorCommon questions
- Is it always CMHC?
- No. CMHC, Sagen and Canada Guaranty all insure Canadian mortgages, and the lender picks. The premium schedules are very similar, but check your commitment for the insurer's name.
- Can I avoid the premium by borrowing my down payment?
- No — and a non-traditional or borrowed down payment in the 90.01–95% band raises the CMHC premium to 4.50%.
Official sources — verified/updated August 2026
Rules and rates change. These are the first-party pages this one was checked against; confirm anything that matters to your purchase directly with them.
Every figure on this page is a planning estimate for general information only, based on the assumptions shown, and are not legal, tax, mortgage or financial advice or an offer of credit. Actual rates, payments, taxes, fees and values vary — confirm the numbers with your lender, lawyer or accountant before relying on them. Full disclosures.
This page is general information about how a cost works in Ontario, not legal, tax, mortgage or accounting advice, and not a quote. Your lawyer, lender and accountant confirm what actually applies to your purchase.
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