Understanding CMHC Mortgage Insurance Bands & Premium Scales

Last updated: June 16, 2026• 5 min read

💡 Quick Answer / Concise Verdict

CMHC mortgage default insurance is legally required in Canada on home loans where the down payment is less than 20%. The premium is calculated as a percentage of your total loan principal (ranging from 4.00% down to 2.80% as your down payment increases). It is capitalized directly into your mortgage, meaning you pay interest on it over the amortization period. You can avoid CMHC insurance completely by placing down 20% or more. Note that as of December 15, 2024, the federal government raised the insured mortgage price cap to $1,500,000 (meaning properties priced up to $1.5M are eligible for default insurance with down payments under 20%).

Who is this for?

Canadian home buyers with a down payment under 20% who need to understand high-ratio lending rules, CMHC pricing bands, and cash requirements for PST.

When does this apply?

This advice applies when calculating your down payment size and estimating your total mortgage balance and monthly carrying costs.

📋 Key Takeaways

CMHC insurance is mandatory for all down payments under 20% in Canada.
Premium bands decrease incrementally from 4.00% to 2.80% as down payments grow.
Properties priced over $1.5M are legally ineligible for default insurance.
Provincial sales tax on the premium must be paid upfront in cash on closing.

⚙️ Step-by-Step Decision Framework

Evaluate Purchase Price Threshold

Determine if the home is under $1.5M; if not, prepare to put down at least 20%.

Calculate Your Down Payment Band

Check if your down payment falls between 5% and 19.99% to identify your premium rate.

Budget for Upfront PST

Calculate the sales tax on your premium (e.g. 8% in Ontario) to add to your lawyer escrow funds.

Model Amortized CMHC Costs

Use Hausee simulators to factor the capitalized premium and interest into your monthly cash flows.

Down Payment percentage	Loan-to-Value (LTV) Band	CMHC Premium Rate	Premium on a $600,000 Loan
5.0% to 9.99%	90.1% to 95.0%	4.00%	$24,000
10.0% to 14.99%	85.1% to 90.0%	3.10%	$18,600
15.0% to 19.99%	80.1% to 85.0%	2.80%	$16,800
20.0% or More	80.0% or Less	0.00% (Exempt)	$0

CMHC Insurance in Plain English:

If you are buying a home in Canada and can't afford a 20% down payment, you are legally required to get mortgage default insurance (commonly called CMHC insurance).

Why does it exist?

Without this insurance, banks would consider a small down payment (like 5% or 10%) too risky and refuse to lend to you. By having CMHC insure your mortgage, the bank knows that if you can't pay your mortgage, they won't lose their money. This protection is what allows banks to offer low-interest rates and let you buy a home with as little as 5% down.

When purchasing a home in Canada, placing down less than 20% of the purchase price makes your loan a "high-ratio mortgage." Under federal regulations analyzed by the Hausee mortgage desk, this requires you to buy **Mortgage Default Insurance**—commonly referred to by its largest provider, the **Canada Mortgage and Housing Corporation (CMHC)**.

This insurance protects the lender (the bank) in case of borrower default, but the buyer operates as the primary premium payer. Let\'s look at how these premium bands scale.

What is CMHC mortgage default insurance and when is it required?

CMHC insurance is a federal regulatory requirement under the Bank Act for any residential mortgage where the down payment is less than 20% of the purchase price. It protects the lender from losses if you default on your payments, making affordable high-ratio financing possible for everyday Canadians.

What are the current CMHC insurance premium bands and rates?

The premium rates are applied directly to the mortgage balance. It starts at **4.00%** for down payments between 5% and 9.99%, drops to **3.10%** for down payments between 10% and 14.99%, and falls to **2.80%** for down payments between 15% and 19.99%. Once you reach a 20% down payment, you are entirely exempt. Note that these default insurance options apply only to properties valued under **$1.5 million** (previously $1 million prior to December 15, 2024). Any home priced at or above $1,500,000 strictly requires a minimum 20% down payment as it is legally ineligible for high-ratio default insurance.

How can you minimize or avoid paying CMHC mortgage insurance?

The only way to completely avoid CMHC fees is to provide a down payment of 20% or more. If that is not possible, reaching the next down payment band (e.g. increasing your down payment from 9% to 10%) can save you thousands of dollars by dropping your premium rate from 4.00% to 3.10%.

⚠️ Common Mistakes to Avoid

•Assuming CMHC insurance is paid in cash at closing (it is added to your loan, though PST is due in cash).
•Forgetting that properties priced at or above $1,500,000 are legally ineligible for CMHC insurance (requiring a minimum 20% down payment).
•Failing to account for provincial sales tax (8% PST in Ontario) on the CMHC premium in your closing cash calculation.

📌 Critical Reminders

✓CMHC insurance premium rates decrease as your down payment percentage increases.
✓Insured mortgages often qualify for slightly lower interest rates because the lender's risk is fully covered.
✓CMHC is one of three providers (alongside Sagen and Canada Guaranty), but they use identical pricing scales.

Disclaimer: Hausee's Learning Playbook and associated calculators are provided strictly for educational and informational purposes. While we work diligently to verify all statistics, rates, and provincial policies, this content does not constitute formal legal, tax, financial, or mortgage brokerage advice. Real estate transactions carry significant financial risk. We strongly recommend consulting with licensed professionals, such as real estate lawyers, certified mortgage brokers, or Chartered Professional Accountants (CPAs), before concluding any legal agreements or home purchases.