Mortgage Insurance Calculator Canada

What is mortgage default insurance in Canada?

**Mortgage default insurance (often called CMHC insurance) is mandatory in Canada whenever your down payment is less than 20% of the purchase price.** It protects the lender, not the borrower, in case you default on your mortgage. Despite protecting the lender, the borrower pays the premium.

Three insurers operate in Canada: the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth), and Canada Guaranty. All three use the same premium rate schedule. Your lender selects the insurer; you do not get to choose.

The insurance premium is calculated as a percentage of the mortgage amount (home price minus down payment) and is almost always added directly to the mortgage balance. This means you pay interest on the premium for the entire life of the loan, making the true cost significantly higher than the premium amount alone.

The maximum insurable home price is $1,500,000 as of December 15, 2024 (increased from $1,000,000). Homes priced above this threshold require a minimum 20% down payment because mortgage insurance is not available.

CMHC premium rates by down payment level

**The premium rate depends entirely on your loan-to-value (LTV) ratio, which is the mortgage amount divided by the home price.** A smaller down payment means a higher LTV and a higher premium rate. The rates are identical at CMHC, Sagen, and Canada Guaranty.

With a standard 25-year amortization, the premium rate is 4.00% for a 5% down payment (95% LTV), 3.10% for 10% down (90% LTV), 2.80% for 15% down (85% LTV), 2.40% for 20-24.99% down (80% LTV, only applies to non-owner-occupied or portable insurance scenarios), 1.70% for 25-34.99% down, and 0.60% for 35%+ down.

If you choose a 30-year amortization (available since August 2024 for first-time buyers purchasing new builds, and expanded in December 2024), a 0.20% surcharge is added to every premium tier. This means a 5% down payment with a 30-year amortization has an effective rate of 4.20% instead of 4.00%.

The premium is calculated on the mortgage amount, not the home price. On a $500,000 home with 5% down ($25,000), the mortgage is $475,000 and the premium is 4.00% of $475,000 = $19,000, bringing the total mortgage to $494,000.

Provincial sales tax (PST) on mortgage insurance premiums

**Three provinces charge provincial sales tax on mortgage insurance premiums: Ontario (8%), Quebec (9.975%), and Saskatchewan (6%).** This PST is payable at closing and cannot be added to the mortgage. It is an out-of-pocket cost on top of your down payment and closing costs.

On a $500,000 home with 5% down in Ontario, the insurance premium is $19,000 and the PST is 8% of $19,000 = $1,520. In Quebec, the PST would be 9.975% of $19,000 = $1,895. In Saskatchewan, it would be 6% of $19,000 = $1,140. In all other provinces, there is no PST on insurance premiums.

This is one of the most commonly overlooked closing costs for first-time buyers in these three provinces. If you are budgeting for a home purchase with less than 20% down in Ontario, Quebec, or Saskatchewan, factor in the PST on the insurance premium as a mandatory cash-at-closing expense.

The PST applies regardless of which insurer (CMHC, Sagen, or Canada Guaranty) your lender uses. It is a provincial tax, not a decision by the insurer.

What happens when the premium is added to your mortgage?

**The insurance premium is almost always added to the mortgage balance, meaning you pay interest on it for the entire amortization period.** This is the default option and what most borrowers choose. The alternative is paying the premium upfront in a lump sum at closing, but this is rare because it requires additional cash.

When the premium is added to the mortgage, it increases your monthly payment. On a $475,000 mortgage with a $19,000 premium added, your total mortgage becomes $494,000. At a 5% interest rate over 25 years, the $19,000 premium costs an additional $111/month in mortgage payments.

Over the full 25-year amortization, you pay approximately $14,200 in interest on the $19,000 premium alone. This makes the true cost of the insurance premium roughly $33,200 ($19,000 + $14,200 in interest). This is why even a small increase in your down payment percentage can save thousands over the life of the mortgage.

If you pay the premium upfront instead of adding it to the mortgage, you save the interest cost entirely. However, most buyers need every available dollar for the down payment and closing costs, making the upfront option impractical.

Energy-efficient home premium refund

**CMHC offers a 25% premium refund for homes that meet energy-efficient standards.** If you purchase or build a home that qualifies under the CMHC Green Home program, you can receive a partial refund of the insurance premium. Sagen and Canada Guaranty offer similar programs.

To qualify, your home must meet or exceed energy efficiency standards such as an EnerGuide rating of 86 or higher, ENERGY STAR certification, R-2000 certification, or LEED Canada for Homes certification. You typically need to provide documentation within 12 months of closing.

On a $19,000 premium, a 25% refund returns $4,750 to you. This refund is applied directly and does not reduce the mortgage balance, but it partially offsets the cost of mortgage insurance. If you are buying a newly built energy-efficient home, this program is worth exploring with your lender.

The refund programs vary by insurer and change over time. Check directly with CMHC, Sagen, or Canada Guaranty (or ask your mortgage broker) for the most current eligibility criteria and refund amounts.

Worked example: $600,000 home with 10% down in Ontario

**Step 1: Enter the home price.** You are purchasing a home for $600,000.

**Step 2: Set your down payment.** You have 10% down ($60,000), leaving a mortgage of $540,000 and an LTV of 90%.

**Step 3: Select Ontario as your province.** Ontario charges 8% PST on insurance premiums.

**Step 4: Choose 25-year amortization.** No surcharge applies at 25 years.

**Step 5: Review results.** Your insurance premium is 3.10% of $540,000 = $16,740. Ontario PST is 8% of $16,740 = $1,339, due at closing. The premium is added to your mortgage, making the total $556,740. The monthly cost of the premium over 25 years is approximately $56/month. The comparison table shows that increasing your down payment to 15% ($90,000) would reduce the premium to $14,280, and reaching 20% ($120,000) would eliminate it entirely, saving you $16,740 in premiums plus $1,339 in PST.