Who actually pays the CMHC insurance premium

CMHC mortgage loan insurance will not keep making your payment if your income stops. It reimburses the lender after a default. Federally regulated lenders require it when the down payment is under 20% of the price. The lender pays the insurer, then passes the premium to you. Most households roll that premium into the mortgage. Provincial sales tax on the same premium cannot be financed. It is due in cash at closing.

The policy covers the lender, not your payment

CMHC's 2025 explainer is blunt: the policy protects the lender, not the buyer, if the borrower stops paying. The consumer page says the same. Buy with less than 20% equity and you need this insurance.

It is not a benefit that carries the house through a job loss. On default the lender can still seize the property. CMHC's FAQ adds that a sale may not clear the debt, and that the borrower can still owe the shortfall.

A loan above 80% of value leaves little room if prices fall. High-ratio insurance is how a one- or two-unit owner-occupied home can be financed up to 95% of price, on the product's terms. The usual alternative is a conventional 20% down payment. Our guide to minimum equity and cash to close is about the savings plan. This article is about the cost of staying below that line. CMHC is not the only insurer in the country. The schedule below is the one it publishes.

The lender pays CMHC, then you repay the bill

CMHC's FAQ says the lender files the application and typically passes the cost to the borrower. The premium can be paid as a lump sum at purchase or blended into the payments. The Financial Consumer Agency of Canada makes the interest point explicit: add the premium to the mortgage and you pay interest on it, at the same rate as the loan. You do not shop CMHC like a car policy. The decisions that move the bill are the down payment, the amortization, and whether to write a cheque for the premium instead of borrowing it.

The agency puts premiums in a band from 0.6% to 4.5% of the loan. CMHC's owner-occupied schedule breaks that into loan-to-value tiers. From 90.01% to 95% LTV, the premium on the whole loan is 4.00%. From 85.01% to 90% it is 3.10%. From 80.01% to 85% it is 2.80%. A non-traditional down payment in the 90.01% to 95% band is 4.50%. The percentage is applied to the loan, not the price. Crossing 20% removes the high-ratio requirement. Stopping at 19% still leaves a 2.80% premium on nearly the whole price.

A worked file: enough equity, still a premium

CMHC's June 2025 example uses a $750,000 home and $60,000 in savings. The insured minimum is 5% of $500,000, or $25,000, plus 10% of the next $250,000, another $25,000, for $50,000 in total. Sixty thousand dollars clears that floor. It is 8% of the price. Twenty percent would be $150,000. Insurance is still required.

The loan is $690,000. In the 90.01% to 95% tier the example uses a 4% premium, or $27,600. That is not an offer. It is CMHC's illustration of the math. Roll the premium into the mortgage and the insured balance becomes $717,600. Pay it in cash and the loan stays $690,000, but closing day now needs another $27,600 on top of the down payment and the usual fees.

The same price with $75,000 down, 10%, leaves a $675,000 loan. LTV is 90%, which sits in the 3.10% tier. The premium falls to $20,925. Fifteen thousand extra dollars of equity save $6,675 of premium. That is not a return. It is the price of remaining in the insured product, one rung down.

At 20% the purchase premium drops out. From the $60,000 file that is another $90,000 of savings. Waiting for that cash, or buying sooner and financing $27,600 plus interest, are different plans. Rent, family timing and the target price belong on the same worksheet as the tier.

The tax that cannot ride on the mortgage

On its premium schedule, CMHC states that some provinces levy a sales tax on the premium, and that this tax cannot be added to the loan. The federal consumer agency says the same: the lender cannot fold that tax into the mortgage. It is paid when the loan is advanced.

So the $717,600 financed figure in the example is not the whole bill. The tax shows up at the notary, in cash, beside the other closing costs. A household that emptied the account to hit the $50,000 minimum, then planned to borrow the premium, still faces a third cheque.

Paying the $27,600 premium in cash avoids interest on it. It does not avoid the tax. Borrowing the premium avoids that cheque on closing day, but puts interest on the premium for the rest of the amortization. The tax is due either way. It is not home insurance, and it is not a life policy. Those are separate contracts.

What pushes the rate even higher

CMHC Home Start stretches amortization to 30 years for a first-time buyer, or for a newly built home that has never been occupied, on a high-ratio loan. The published premium is not the 25-year purchase rate. From 90.01% to 95% it is 4.20%. On the $690,000 example that is $28,980 instead of $27,600. Monthly payments fall because the schedule is longer. The premium rises. So does lifetime interest.

Borrowed down payment from an unsecured line, in the 90.01% to 95% band, is not a traditional source. The purchase schedule prices that at 4.50%, or $31,050 on $690,000. The personal loan that "tops up" savings can therefore cost twice: its own interest, and a higher insurance tier.

Equity is not the whole file. For the Purchase product CMHC wants at least one borrower at a 600 credit score, GDS and TDS no higher than 39% and 44%, and a qualifying rate equal to the greater of 5.25% and contract plus 2%. Our stress-test guide walks through that test. The point here is simpler: a premium added to the loan is extra principal under that test. $717,600 does not qualify the way $690,000 does.

If you are selling to buy again and the current loan has been CMHC-insured since 1 April 1996, portability can cut or erase the new premium. The schedule credits a rebate based on time elapsed: 100% at six months, 50% at twelve, 25% at twenty-four, applied to the premium already paid. It is not automatic. Ask the lender, with the certificate number.

Above $1.5 million in purchase price or lending value, the owner-occupied product is not available. Conventional equity is then the door, even if the savings account looks large in isolation.

What to get in writing before you offer

Keep two products apart. High-ratio default insurance, required under 20% down, is not the optional credit insurance a lender may offer for death, illness or disability. Mixing them up is how people conclude, wrongly, that CMHC will make the payment if they get sick.

Then have, in writing, the down payment and LTV, the premium and whether it will be added to the loan, the provincial tax due in cash, and the principal the stress test will use. Confirm the source of funds, the amortization, and whether an already-insured loan opens a rebate.

The useful work is to see who is covered, who pays, how much the premium adds to the loan, and which cheque is still due at the notary. You can run that total before you tour. A first conversation is free and does not commit you to a lender.

Certain conditions may apply. Subject to change without notice.