What is CMHC Mortgage Loan Insurance?
Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with as little as 5% down payment — with interest rates comparable to those with a 20% down payment.
To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.
Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.
How Much Does CMHC Mortgage Insurance Cost?
To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. Your lender will give you the exact price when you apply for a mortgage.
The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.
Remember: without mortgage insurance you may avoid the insurance premium but you’ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved.
A 10% premium refund and extended amortization period without surcharge may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Homes.
| Financing Required |
Premium % of Loan Amount
|
| Up to and including 65% |
0.50
|
| Up to and including 75% |
0.65
|
| Up to and including 80% |
1.00
|
| Up to and including 85% |
1.75
|
| Up to and including 90% |
2.00
|
Up to and including 95%
Traditional Down Payment
Flex Down |
2.75
2.90
|
Secured Line of Credit Surcharge (less than or equal to 80%)
Non-amortized repayment option:
5 years
10 years |
0.25
0.50
|
Extended Amortization Surcharges
For every 5 years of amortization beyond the 25 year mortgage period |
0.20
|
| *Premiums in Ontario and Quebec are subject to provincial sales tax — the sales tax cannot be added to the loan amount. |