Mortgage loan insurance premiums explained

The short answer

A mortgage generally needs loan insurance when the down payment is under 20% of the price. The insurance protects the lender. The buyer pays a premium that CMHC sets as a percentage of the total loan. The percentage depends on the loan to value, which is the loan divided by the price. The CMHC table runs from 0.60% for a loan up to 65% of the price to 4.00% for a loan above 90% and up to 95%.

This page is general information about published CMHC figures. It quotes no mortgage rate and no approval. For how this fits into a first purchase, see the first-time home buyers guide and the mortgages page.

The down payment tiers

CMHC states the minimum down payment for a one to two unit owner-occupied home as 5% of the first $500,000 of lending value plus 10% of the rest. For a three to four unit home the minimum is 10%.

FCAC describes the same tiers by price:

• $500,000 or less: 5%.
• Over $500,000 up to $1.5 million: 5% of the first $500,000 plus 10% of the rest.
• $1.5 million or more: 20%.

FCAC adds that a down payment below 20% generally needs mortgage loan insurance. CMHC states the purchase price or as-improved value must be under $1,500,000 for an insured mortgage. The Department of Finance raised that cap from $1 million to $1.5 million effective December 15, 2024. One FCAC page still refers to $1 million. This post follows CMHC and the Department of Finance.

The CMHC premium table

CMHC publishes the premium as a percentage of the total loan.

Loan to value	Premium on the total loan
Up to 65%	0.60%
65.01% to 75%	1.70%
75.01% to 80%	2.40%
80.01% to 85%	2.80%
85.01% to 90%	3.10%
90.01% to 95%	4.00%
90.01% to 95% with a non-traditional down payment	4.50%

CMHC also lists other conditions for an insured purchase. A borrower or a close relative must live in the home. At least one borrower or guarantor needs a credit score of 600 or higher. The gross debt service ratio can be up to 39% and the total debt service ratio up to 44%, tested at the higher of the contract rate plus 2% or 5.25%.

Worked example at a $600,000 price

The price is $600,000, which is under the $1,500,000 limit. Each case below uses the minimum down payment for its tier.

Minimum down payment

1. 5% of the first $500,000 is $25,000.
2. 10% of the remaining $100,000 is $10,000.
3. The down payment is $25,000 plus $10,000, which is $35,000.
4. The loan is $600,000 less $35,000, which is $565,000.
5. The loan to value is $565,000 divided by $600,000, which is 94.17%.
6. That falls in the 90.01% to 95% row, so the premium is 4.00%.
7. 4.00% of $565,000 is $22,600.

A 10% down payment

1. 10% of $600,000 is $60,000.
2. The loan is $600,000 less $60,000, which is $540,000.
3. The loan to value is $540,000 divided by $600,000, which is exactly 90%.
4. That falls in the 85.01% to 90% row, so the premium is 3.10%.
5. 3.10% of $540,000 is $16,740.

Comparing the two cases, the extra down payment is $60,000 less $35,000, which is $25,000. The premium falls from $22,600 to $16,740, a difference of $5,860. These figures come from the published table. A lender confirms the premium on a real file.

Ontario sales tax on the premium

CMHC states that Ontario applies provincial sales tax to mortgage loan insurance premiums. It also states that this tax cannot be added to the loan. The tax is therefore paid outside the loan, separate from the down payment. The tax rate and the amount for a given file are not shown in the sources used here, so ask your lender for the figure. For the other closing costs, read the land transfer tax and closing costs post.

Closing costs and the 20% line

Insurance is tied to the down payment, not to the size of the premium. At $600,000, a 20% down payment is $120,000 and the loan is $480,000. FCAC says a down payment below 20% generally needs insurance, so the cases above are the insured ones.

Insurance premiums are only one part of what a buyer pays up front. FCAC names home inspection, legal fees, property tax adjustments and title insurance as closing cost categories and suggests budgeting 1.5% to 4% of the purchase price. At $600,000 that range is $9,000 to $24,000, because 1.5% of $600,000 is $9,000 and 4% of $600,000 is $24,000. That range is a budgeting guide from FCAC and is not a quote.

With 20% or more down the mortgage is uninsured and the lender sets the maximum amortization. OSFI sets the minimum qualifying rate for uninsured mortgages at the greater of the contract rate plus 2% or 5.25%.

Amortization and insured mortgages

FCAC states the maximum amortization for an insured mortgage is 30 years for first-time buyers or new builds and 25 years otherwise. CMHC wording on its purchase page differs, so check the figure with your lender.

What to ask before you buy

• Which loan to value row applies to your price and down payment.
• What the premium is in dollars and how it is paid.
• What the provincial sales tax on the premium comes to.
• Whether the home could qualify for the energy-efficiency premium refund.
• Which amortization applies to your purchase.

Ask Kandice or Kirby for help planning these questions. The mortgages page carries the licence details for mortgage services.