Mortgage Default Insurance in Canada, Explained
If you’re buying with less than 20% down, mortgage default insurance is part of the deal. Here’s what it is, what it costs, and the 2024 rule changes that let more Canadians buy with a smaller down payment — explained by a Calgary mortgage broker.
What is mortgage default insurance?
Mortgage default insurance (often called CMHC insurance) protects your lender from a loss if a borrower stops making payments. It’s mandatory in Canada on any mortgage with a down payment of less than 20% — a “high-ratio” mortgage. It doesn’t protect you or cover your payments; what it does is let lenders say yes to a smaller down payment, which is how most first-time buyers get into the market with as little as 5% down.
Do I need mortgage default insurance?
If your down payment is 20% or more, no — your mortgage is “conventional” and no insurance is required. If it’s under 20%, yes — it’s built into the deal, and the premium is added to your mortgage balance rather than paid up front.
Who qualifies? Eligibility requirements
To have a mortgage insured, borrowers generally need to meet a few criteria:
Maximum purchase price: under $1.5 million — raised from $1 million on December 15, 2024.
Minimum down payment: 5% on the first $500,000 of the price, and 10% on the portion between $500,000 and $1.5M (see the table below).
New in 2024: a $1.5M cap and 30-year amortizations
Two federal changes took effect December 15, 2024 and meaningfully expanded who can buy with an insured mortgage:
$1.5M price cap
Insured mortgages are now available on homes priced up to $1.5 million — up from the old $1 million limit — so buyers in higher-priced markets can put down less than 20%.
30-year amortizations
First-time buyers and anyone buying a newly built home can now choose a 30-year insured amortization (up from 25), which lowers the monthly payment.
A small surcharge
Choosing the 30-year amortization adds a 0.20% premium surcharge — a modest cost for the extra breathing room in your monthly budget.
How much does mortgage default insurance cost?
The premium depends on your loan-to-value ratio (LTV) — how much of the home’s value you’re financing. The less you put down, the higher the premium. It’s a one-time cost, added to your mortgage and paid off over time.
| Down payment | Loan-to-value | Premium on loan |
|---|---|---|
| 35%+ down | Up to 65% | 0.60% |
| 25%–35% down | 65.01% – 75% | 1.70% |
| 20%–25% down | 75.01% – 80% | 2.40% |
| 15%–20% down | 80.01% – 85% | 2.80% |
| 10%–15% down | 85.01% – 90% | 3.10% |
| 5%–10% down | 90.01% – 95% | 4.00% |
A 30-year amortization adds a 0.20% surcharge to the rates above. Premiums are non-refundable and are added to your mortgage balance, so you pay interest on them over the life of the loan.
How much down payment do I need?
| Home price | Minimum down payment |
|---|---|
| $500,000 or less | 5% |
| $500,000 – $1,500,000 | 5% on first $500k + 10% on the rest |
| $1,500,000 or more | 20% (no insurance available) |
Who provides it? The three insurers
Canada has three mortgage default insurers. Your lender chooses which to use, but they offer similar coverage — and each has niche programs a broker can tap:
- CMHC — the federal Crown corporation and the original provider.
- Sagen (formerly Genworth) — programs for new-to-Canada buyers, self-employed, second mortgages, investment properties, and borrowed-down-payment mortgages.
- Canada Guaranty — programs for new-to-Canada buyers, conventional and rental-property mortgages, second mortgages, and more.
The drawbacks to weigh
Insurance is what makes a low down payment possible, but it isn’t free:
- Non-refundable — the premium is a real, one-time cost you don’t get back.
- Interest on the premium — because it’s added to your mortgage, you pay interest on it for the life of the loan.
- It protects the lender, not you — it’s not homeowner or life insurance.
Sometimes it’s worth putting down a little more to shrink or avoid the premium; sometimes buying sooner with 5% down is the better move. That trade-off is exactly the kind of thing we’ll run the numbers on with you.
How a Calgary mortgage broker helps
We serve buyers and homeowners across Alberta — including Calgary and Edmonton — and here’s what that means for your insured mortgage:
- We compare CMHC, Sagen and Canada Guaranty to find the program that fits your situation.
- We run the math on 25- vs 30-year amortization and different down payments so you see the real cost.
- We shop 30+ lenders for the best rate on your insured mortgage — free, with no credit check to start.
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Frequently asked questions
Do I have to pay mortgage default insurance?
How much does CMHC insurance cost?
What’s the maximum home price for an insured mortgage?
Can I get a 30-year amortization with less than 20% down?
Is mortgage default insurance the same as mortgage life insurance?
Is the premium refundable if I sell or refinance?
Buying with less than 20% down?
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Free · No credit check to start · No obligationThis article is general information, not financial, mortgage or legal advice. Insurance rules, premiums, price caps and amortization limits are set by the insurers and the federal government and are subject to change; your eligibility depends on your situation and lender approval. Please speak with a licensed mortgage professional about your specific circumstances. Mortgages for Less with INDI Mortgage.