What is CMHC Mortgage Loan Insurance?

If you want to buy a home with a down payment of less than 20%, you’ll need mortgage loan insurance. This protects your lender in case you can’t make your payments.

Benefits

CMHC mortgage loan insurance lets you get a mortgage for up to 95% of the purchase price of a home. It also ensures you get a reasonable interest rate, even with your smaller down payment.

Mortgage loan insurance helps stabilize the housing market, too. During economic slumps when down payments may be harder to save, it ensures the availability of mortgage funding.

Minimum down payment

To get mortgage loan insurance, you’ll need a minimum down payment. The amount depends on the home’s purchase price:

• If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.
• If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.
• If the home costs $1,500,000 or more, mortgage loan insurance is not available.

Traditional down payments

Down payments can come from sources such as savings, the sale of a property or a non-repayable financial gift from a relative.

Non-traditional down payments (homeowner loans only)

• The down payment must be arm’s length and not tied to the purchase and sale of the property, either directly or indirectly. Non-traditional sources could include unsecured personal loans or unsecured lines of credit.
 
• Available for 1- or 2-unit properties with an LTV of 90.01% to 95%, for borrowers with a strong credit management history.
• Non-permanent residents and loans under the chattel loan insurance product are not eligible.

Cost

Your lender pays an insurance premium on mortgage loan insurance. It’s calculated as a percentage of the mortgage and is based on the size of your down payment. Your lender will likely pass this cost on to you. You can pay it in a lump sum or add it to your mortgage and include it in your payments.

Calculate your insurance premium with our mortgage loan insurance chart.

Get more details by reading our frequently asked questions about CMHC mortgage loan insurance.