Ontario CMHC Insurance

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In Canada, homebuyers with less than 20% down payment are required to purchase mortgage default insurance, or CMHC insurance. Mortgage default insurance protects lenders in the event a home buyer defaults on a mortgage. Thanks to this protection, lenders can offer lower mortgage rates for higher risk mortgages and mortgages with lower down payments

Ontario CMHC Insurance Calculator

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Down payment Down payment The amount of money you pay up front to obtain a mortgage. The minimum down payment in Canada is 5%. For down payments of less than 20%, home buyers are required to purchase mortgage default insurance, commonly referred to as CMHC insurance.
Amortization period Amortization period The length of time it will take a homeowner to pay off his/her mortgage. In Canada, the maximum amortization period is 25 years. Longer amortization periods allow homeowners to make smaller monthly payments, but equate to more interest paid over the life of the mortgage.  
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Mortgage insurance Mortgage insurance Mortgage default insurance, commonly referred to as CMHC insurance, protects the lender in the case the borrower defaults on the mortgage. Mortgage default insurance is required on all mortgages with down payments of less than 20%, which are known as high ratio mortgages. Mortgage default insurance is calculated as a percentage applied to your mortgage amount. plus
Total Mortgage Required equals $- $- $- $-

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CMHC insurance regulation and premium rates in Ontario are the same across Canada. Insurance premium rates range from 1.80% to 3.60% of your mortgage amount. Federal regulations on CMHC insurance include the following:

  • CMHC insurance must be purchased for all homes with less than 20% down payment.
  • Homes purchased for more than $1 million are not eligible for CMHC insurance, therefore requiring homeowners to put more than 20% down.
  • The maximum amortization period on CMHC insured mortgages is 25 years.
  • Homes sold over $500,000 can no longer be purchased with a 5% down payment. The new minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.

The CMHC insurance premium is added to your mortgage amount, and is paid off over your amortization period through monthly mortgage payments

PST on Mortgage Default Insurance – Ontario

Ontario charges PST on mortgage default insurance. In Ontario this tax is 8% of the CMHC insurance premium, and must be paid in full when your house closes. The PST is therefore different from the premium as it is not added to your mortgage balance.

Mortgage default insurance rates

The CMHC insurance premium is calculated as a percentage of your mortgage amount. This percentage varies depending on your down payment percentage and amortization period

Down payment (% of home’s price) 5% - 9.99% 10% - 14.99% 15%-19.99% 20% or higher
CMHC insurance premium 3.60% 2.40% 1.80% 0%

Note: your amortization period must be 25 years or less.

Sample Calculation for CMHC insurance in Ontario:

Let’s say you have bought a $300,000 home with a $40,000 down payment and an amortization period of 25 years. Your insurance premium would be calculated as follows:

Ontario CMHC insurance calculation
( $40,000 down payment ÷ $300,000 home price) =
13.33% down payment percentage
$300,000 home price $40,000 down payment =
$260,000 mortgage before CMHC
( $260,000 mortgage before CMHC 2.40% CMHC tax rate) =
$6,240 CMHC insurance premium
$260,000 mortgage before CMHC $6,240 CMHC insurance premium =
$266,240 total mortgage
( $6,240 CMHC insurance premium 8.00% PST tax rate) =
$499 PST

You will pay the insurance premium of $6,240 in your monthly payments and the $499 PST with your Ontario closing costs. These closing costs can include fees for home inspectors in Ontario and real estate lawyers in Ontario.

Mortgage default insurance rates in Ontario with a non-traditional down payment

Using non-traditional sources of down payment will incur a surcharge on your CMHC insurance for down payments from 5% to 9.99%. Non-traditional sources include borrowed funds and gifts from non-immediate family members.

Down payment (% of home’s price) 5% - 9.99% 10% - 14.99% 15%-19.99% 20% or higher
CMHC insurance premium 3.85% 2.40% 1.80% 0%

Mortgage default insurance rates for self-employed, non-verified income

For self-employed home buyers without 3rd-party income, the minimum down payment required is 10% and insurance premiums on down payments from 10% - 19.99% are higher than those of regular applicants.

Down payment (% of home’s price) 5% - 9.99% 10% - 14.99% 15%-19.99% 20% or higher
CMHC insurance premium N/A 4.75% 2.90% 0%