PST on CMHC Insurance

If you don’t save enough to make a down payment of 20% or more on a home, you will need to purchase mortgage default insurance. More commonly known as CMHC insurance, mortgage default insurance protects your lender in the event that you ever had to default on your mortgage. While CMHC insurance can quickly add up to thousands of dollars, it’s not a cost you need to pay for upfront. Instead, CMHC insurance is added to your mortgage and paid off over the life of your loan.

There is, however, one cost associated with CMHC insurance that you may need to pay for with cash. If you live in Manitoba (7%), Ontario (8%) or Quebec (9.975%), you need to pay the provincial sales tax (PST) on your CMHC insurance – and that amount is due on closing day.

For example, if your CMHC insurance premium amounts to $6,200 and you live in Ontario, the PST on your CMHC insurance would be:

$6,200 CMHC Insurance Premium 8.00% PST in Ontario =
$496 PST on CMHC

In this example, you would have to pay $496 for the PST on your CMHC insurance, on closing day.