Alberta CMHC Insurance
In Canada, home buyers with less than 20% down payment require mortgage default insurance, or CMHC insurance. Mortgage default insurance protects lenders in the event a home buyer defaults. Thanks to this protection, lenders can offer lower mortgage rates for mortgages with lower down payments.
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A guide to Alberta CMHC insurance
Jamie David, Sr. Director of Marketing and Mortgages
In Alberta and the rest of Canada, CMHC insurance premium rates range from 2.80% to 4.00% of your mortgage amount. CMHC insurance regulations are also consistent across the country and include the following:
- Homes with less than 20% down payment must have CMHC insurance.
- Homes purchased for more than $1 million are not eligible for CMHC insurance, requiring home owners to put down at least 20%.
- Homes with CMHC insurance have a maximum amortization period of 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
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 as follows:
| Down payment (% of home’s price) | 5% - 9.99% | 10% - 14.99% | 15%-19.99% | 20% or higher |
| CMHC insurance premium | 4.00% | 3.10% | 2.80% | 0% |
Note: your amortization period must be 25 years or less.
Sample Calculation for CMHC insurance in Alberta:
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 CMHC) × 3.10% (CMHC tax rate)
= $8,060 (CMHC insurance premium) - $260,000 (mortgage before CMHC) + $8,060 (CMHC insurance premium)
= $268,060 (total mortgage)
You will pay the insurance premium of $8,060 in your monthly payments.
Mortgage default insurance rates in Alberta with a non-traditional down payment
Using non-traditional sources of down payment will increase your CMHC insurance premium for down payment amounts from 5% to 9.99%. Non-traditional sources of down payment 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 | 4.50% | 3.10% | 2.80% | 0% |
Mortgage default insurance rates in Alberta for self-employed, non-verified income
Self-employed home buyers without 3rd-party income validation are also charged higher insurance premiums. 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% |