Buying a home with a smaller down payment? If you have less than 20% down, chances are you’ll be paying for Canada Mortgage and Housing Corporation (CMHC) mortgage insurance. But what does that really mean — and how much will it cost you? Let’s break down how it works in 2025 and help you budget smartly.
What is CMHC Mortgage Insurance — and When Is It Required?
CMHC mortgage insurance is a type of default insurance that protects lenders (not homeowners) in case of a mortgage default. It becomes mandatory when:
- Your down payment is under 20% of the home purchase price; and
- You’re buying a home below a certain price threshold (in many cases under $1 million).
If you meet those conditions, you’ll need to add the insurance premium to your mortgage — or, less commonly, pay it up front.
How Much Does It Cost — and How Is It Calculated?
The cost depends primarily on your down payment percentage (or Loan-to-Value ratio). As of 2025, here’s a typical fee structure for insured mortgages:
| Down Payment (of Home Price) | CMHC Insurance Premium (of Mortgage Amount) |
| 5% – 9.99% | ~4.00% |
| 10% – 14.99% | ~3.10% |
| 15% – 19.99% | ~2.80% |
| 20% or more | 0% — no insurance required |
Example: On a $500,000 home with a 10% ($50,000) down payment, your mortgage would be $450,000. A 3.10% premium means an extra $13,950 — bringing your total mortgage to about $463,950.
Most Canadian homebuyers roll the premium into the mortgage, meaning you pay interest on that extra amount over time.
Other Considerations — Beyond the Premium
- Amortization Limits: Insured mortgages typically have maximum amortization periods (often 25 years), though first-time buyers or new-build buyers may see exceptions.
- Premium Taxes: In some provinces (e.g. Ontario, Québec, Manitoba, Saskatchewan), provincial sales tax may apply to the insurance premium — and is usually paid at closing rather than added to the mortgage.
- Your Rate Might Be Lower: Because CMHC insurance lowers the lender’s risk, insured mortgages sometimes come with slightly lower interest rates compared to uninsured ones.
Is CMHC Insurance Always Bad? Not Necessarily.
For many first-time buyers or those with limited savings, CMHC insurance makes homeownership possible with as little as 5% down.
It’s a trade-off: you pay a one-time (or rolled-in) premium — but gain access to financing you couldn’t get otherwise. For buyers who aren’t ready to put 20% down, it remains a helpful option.
That said: if you can afford 20% or more down payment, you avoid the premium entirely — which can save you thousands over the life of the mortgage.
Thinking About a Low-Down-Payment Mortgage?
If you’re considering a home but don’t yet have 20% down, the Ingram Mortgage Team can help you:
- Understand exactly how much CMHC insurance will cost;
- Compare scenarios (low-down payment vs larger down payment);
- Explore other mortgage default insurance providers as alternatives.
Contact us today!