Nobody loves paying for insurance they don’t get to use themselves. And CMHC insurance might be the most misunderstood line item in Canadian real estate — most people assume it’s there to protect them. It isn’t.

What is CMHC insurance?

CMHC insurance — also offered through Sagen and Canada Guaranty — is mortgage default insurance required by Canadian law whenever a down payment is less than 20% of the purchase price. It protects the lender if the borrower defaults, not the borrower themselves.

Who does CMHC insurance actually protect?

The lender. That’s the part that surprises most people. But because the lender is protected, they’re willing to approve a smaller down payment than they otherwise would. No insurance, no 5%-down purchase — period. The premium isn’t a penalty for not having enough saved. It’s the mechanism that lets you buy with less of it.

How much does CMHC insurance cost?

The premium is a percentage of the mortgage amount, set in tiers based on loan-to-value:

• 5% down → 4.00% premium
• 10% down → 3.10% premium
• 15% down → 2.80% premium
• 20%+ down → no premium, no insurance required

On a $500,000 purchase with 5% down, that’s roughly $17,820 — almost always added directly onto the mortgage rather than paid out of pocket, so it’s financed over the amortization, not a closing-day surprise.

Is CMHC insurance worth it?

It adds to total cost over the life of the mortgage — nobody’s pretending otherwise. But the alternative, waiting until 20% is saved, can take longer than the time it takes to build equity once actually in the market. For a lot of buyers, paying the premium and getting in now beats waiting and renting in the meantime.

This isn’t a pitch for buying with less down. It’s a straight answer about what that insurance line item actually means, so you’re not left wondering what you just paid for.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2025-3000179) Broker (2025-3000180), Ontario(M23006699).

p.s.s.s You can download my new mortgage app here

Patrick Sawler is a mortgage broker and owner of Craigburn Capital, licensed in Nova Scotia and Ontario, with private financing available in New Brunswick and PEI. He answers his phone.

Ready to have a real conversation? Call 902-612-2688 or start your application here