What is mortgage default insurance and how to calculate it? (CMHC Insurance)

In Canada, mortgage default insurance (also known as CMHC insurance) is mandatory for all home buyers putting less than a 20% down payment on their home. CMHC insurance protects lenders against the risk of a borrower defaulting. As a result, lenders are not only willing to provide mortgages to Canadians that otherwise might not qualify, but they are also able to offer lower mortgage rates.

The Cost

Mortgage default insurance costs homebuyers anywhere from 2.8% to 4% of their mortgage amount, and the rates depend on the down payment percentage.


Down Payment

(% of home price)



5% - 9.99%


10% - 14.99%


15% - 19.99%


20% or higher


CMHC Premium Rate









How To Calculate Mortgage Default Insurance 


Example Calculation


Example Data

$350,000 Home Value

$50,000 Down Payment

25 Years Amortization




Step 1: Calculate your down payment percentage



Down payment



Home Value





Step 2: Calculate your mortgage amount



Home Value



Down Payment





Step 3: Calculate mortgage insurance premium



Mortgage amount




Insurance Premium Rate





To Qualify

In order to be eligible for mortgage default insurance, you must have:

  • A maximum mortgage amortization period of 25 years
  • A higher down payment on homes with purchase prices between $500,000 and $999,999. More specifically, 5% of the first $500,000 and 10% of the remaining amount

Keep in mind, if you’re purchasing a home for over $1 million, mortgage default insurance is not an option because you’re required to make a minimum down payment of at least 20%.

Canadian Mortgage Default Insurance Providers

Canada has three mortgage default insurance providers:

  1. The Canada Mortgage and Housing Corporation (CMHC)
  2. Genworth Financial Canada Guaranty
  3. Canada Guaranty

How to Pay for Mortgage Default Insurance

Mortgage default insurance is funded through your mortgage, so you don’t need to come up with the cash separately upon closing. Instead, your premium is rolled into your mortgage to be paid over the lifespan of your loan.

How to Reduce Your Mortgage Default Insurance

The only way to reduce your mortgage default insurance is to:

1) Increase the amount you put down

2) Buy a less expensive property