CMHC Mortgage Loan Insurance

Get into your home sooner. Mortgage loan insurance helps you do it. Put as little as 5% down.

When you need a mortgage loan that is more than 75% of the purchase price of your home, mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it.

CMHC has pioneered mortgage insurance products and services that have helped finance more than one-third of Canadian homes. With mortgage loan insurance, many Canadians who might not be able to save a 25% down payment can still buy a home.

Having mortgage loan insurance means that if the borrower defaults (fails to pay) on the mortgage, the lender is paid back by the insurer. (However, it should be noted that the protection provided by the lender by the insurer does not relieve the borrower of the obligations under the mortgage contract.)

Without the risk of losing their money, lenders have the confidence to make mortgage loans up to 95% of the purchase price of the home.

CMHC enables eligible Canadians to finance up to 95% of the purchase price of a home. This means you may be able to buy a property with as little as 5% down. So if the cost of the home were $125,000, you would need a downpayment of just $6,250. CMHC Mortgage Loan Insurance has made home ownership possible for millions of Canadians.

What does mortgage loan insurance cost?

There are two components an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00.

The mortgage loan insurance premium is calculated as a percentage of the loan and is based on the size of the downpayment in relation to the total purchase price. For example, a downpayment of 25% would incur an insurance premium of .75% of the total loan value and a downpayment of 5% would incur an insurance premium of 3.75% of the total loan value.

Homeowner mortgage loan insurance premiums vary according to the loan-to-value ratio.

Effective July 14, 2003
Loan Amount as a % of the Value of the Home	Purchase Premium on Total Loan	Premium on Increase to Loan Amount for Portability and Refinance *
Up to and including 65%	0.50%	0.50%
Up to and including 75%	0.65%	2.25%
Up to and including 80%	1.00%	2.75%
Up to and including 85%	1.75%	3.50%
Up to and including 90%	2.00%	4.25%
Up to and including 95%	3.25%	—
* For Portability and Refinance, the premium is the lesser of the premium on the increase to the loan amount or, the Purchase premium on the total loan. In the case of Portability, a premium credit may be available under certain conditions to reduce the Purchase premium. Note: See your lender for premium surcharges and other terms and conditions which continue to apply.

You can pay this premium in a single lump sum (saving interest on this charge), or add it to your mortgage and include it in your monthly payments.

Where can mortgage loan insurance be obtained?

See your lender, who can obtain mortgage loan insurance from CMHC or a private insurer.

CMHC will insure mortgages of up to 95% of the home’s purchase price or the market value of the property, whichever is less. (Restrictions may apply. Contact your local lender.)

Both new and resale homes are eligible. Here are some of the criteria that must be met:

The home must be in Canada and must be your principal residence.
Housing payments, including principal, interest, property taxes, heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, can’t be more than 32% of your gross household income (GDS ratio).
Your total debt load can’t be more than 40% of your gross household income (TDS ratio). Other criteria apply and are subject to change. For details, please contact CMHC or your local lender.

For additional information on calculating the Gross Debt Service (GDS) and the Total Debt Service (TDS), go to Step 3: Calculate Your Costs

CMHC mortgage loan insurance helped Ruth and Sidney obtain a mortgage.