Ontario CMHC Insurance

Mortgage default insurance regulation (often known as CMHC insurance regulation) and premium rates in Ontario are the same across Canada. Insurance premium rates range from 1.80% to 4.00% of your mortgage amount. Federal regulations on mortgage default insurance include the following:

• Mortgage default insurance must be purchased for all homes with less than 20% down payment.
• Homes purchased for more than $1 million are not eligible for mortgage default insurance, therefore requiring homeowners to put more than 20% down.
• The maximum amortization period on insured mortgages is 25 years.
• Homes sold over $500,000 require a minimum down payment of 5% of the first $500,000, and 10% of any amount over $500,000.

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

Note: your amortization period must be 25 years or less on an insured mortgage.

Sample calculation for mortgage default 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:

• $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 mortgage default insurance) × 3.10% (mortgage default tax rate)
  = 8,060 (mortgage default insurance premium)
  
  
• $260,000 (mortgage before mortgage default insurance) + $8,060 (mortgage default insurance premium)
  = $268,060 (total mortgage)
  
  
• $8,060 (mortgage default insurance premium) × 8.00% (PST tax rate)
  = $645 (PST)

You will pay the insurance premium of $8,060 in your monthly payments and the $645 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 mortgage default insurance for down payments from 5% to 9.99%. Non-traditional sources include borrowed funds and gifts from non-immediate family members.

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

For self-employed homebuyers 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.