CanadaWhat mortgage default insurance coverage does CMHC provide to lenders?
CMHC provides mortgage default insurance to lenders for eligible residential mortgages with down payments of less than 20%, protecting lenders against loss if borrowers default.
What the Law Says
The National Housing Act authorizes CMHC to provide mortgage default insurance to approved lenders for qualifying residential loans. This insurance protects lenders — not borrowers — from financial loss due to borrower default.
Mortgage default insurance is mandatory in Canada for residential mortgages where the down payment is less than 20% of the purchase price. CMHC is the federal Crown corporation authorized to provide this insurance under the National Housing Act.
The insurance does not cover the borrower’s debt or guarantee repayment to the borrower. Instead, it reimburses the lender for losses incurred if the borrower stops making payments and the property sale doesn’t cover the outstanding loan balance.
Eligibility depends on factors including loan-to-value ratio (up to 95%), property type (single-family, duplex, etc.), borrower creditworthiness, and maximum insurable loan amount ($1 million as of 2024).
Statutory TextCMHC may insure housing loans made by approved lenders.
— National Housing Act, s. 8 — Insurance of loans
What to Do
Confirm your down payment is at least 5% (for homes ≤ $500,000) or 5–10% (for homes > $500,000) to qualify.
Apply through an approved lender — they arrange CMHC insurance as part of mortgage approval.
Pay the one-time insurance premium (added to your mortgage or paid upfront), based on loan-to-value ratio.
Review CMHC’s current eligibility guidelines, as rules (e.g., income verification, property limits) change periodically.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.