CanadaWhat is CMHC mortgage insurance and when do I need it?
CMHC mortgage insurance is government-backed protection for lenders against borrower default, required in Canada when your down payment is less than 20% of the home’s purchase price.
What the Law Says
The National Housing Act authorizes CMHC to provide mortgage default insurance — a key tool to support housing affordability and lender confidence across Canada.
CMHC mortgage insurance (officially called 'mortgage loan insurance') is not optional home insurance — it protects lenders, not borrowers, if a homeowner defaults on their mortgage. It is administered by the Canada Mortgage and Housing Corporation (CMHC) under authority granted by the federal National Housing Act.
This insurance is mandatory for all conventional mortgages with a down payment of less than 20% of the home’s purchase price or appraised value (whichever is lower). It applies to homes priced up to $1 million; mortgages on homes over $1 million require a minimum 20% down payment and are ineligible for CMHC insurance.
Once insured, the loan is backed by the Government of Canada — meaning CMHC will reimburse the lender for losses if the borrower stops paying and the home sale doesn’t cover the outstanding balance.
Statutory TextCMHC may insure housing loans made by approved lenders.
— National Housing Act, s. 8 — Insurance of loans
Statutory TextThe total of insured amounts outstanding shall not exceed the limit set by regulation.
— National Housing Act, s. 78 — Mortgage default insurance limit
What to Do
Check if your down payment is less than 20% of the home’s purchase price or appraised value.
Confirm your lender is an approved CMHC lender (most major banks and credit unions are).
Apply for CMHC insurance through your lender — they handle the application and calculate the premium.
Pay the one-time, non-refundable premium (added to your mortgage or paid upfront), ranging from 2.90% to 4.50% depending on your down payment size.
Review your mortgage agreement to ensure the insurance details and premium are clearly disclosed.
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.