If your down payment is under 20%, you are buying mortgage default insurance whether you want it or not. Here is what it is, what it costs at each down payment level, and the Ontario tax on it that must be paid in cash.
Mortgage default insurance — most people call it "CMHC insurance" after the Crown corporation that provides most of it — protects your lender, not you. If you default and the home sells for less than the mortgage owing, the insurer covers the lender's shortfall. You pay the premium anyway, which feels backwards until you see what it buys you: access to a mortgage with as little as 5% down, and often a better interest rate than an uninsured borrower gets, because insured mortgages are lower-risk for the lender and cheaper for them to fund. Two other insurers (Sagen and Canada Guaranty) offer the same product on essentially the same premium schedule; "CMHC" is simply the name that stuck.
The rule is simple: if your down payment is less than 20% of the purchase price, the mortgage must be insured — there is no opting out to save the premium. Insurance is only available on homes priced under $1,500,000, which is also why the minimum down payment jumps to a flat 20% at that price. The minimum down payment itself is tiered: 5% on the first $500,000 of the price and 10% on the portion from $500,000 to $1,499,999. Amortization is capped at 25 years for insured mortgages, extended to 30 years for first-time buyers and for buyers of new builds. If you have 20% or more down, you do not pay this premium at all — which is one reason the 20% threshold matters so much in Canadian house hunting.
The premium is a percentage of the mortgage amount, set by your loan-to-value ratio (the mortgage divided by the price). Using the standard schedule this site's calculators apply:
| Down payment | Loan-to-value | Premium rate | Premium on a $500,000 home | Ontario PST (8%) |
|---|---|---|---|---|
| 5% | 95% | 4.00% | $19,000 | $1,520 |
| 10% | 90% | 3.10% | $13,950 | $1,116 |
| 15% | 85% | 2.80% | $11,900 | $952 |
| 20%+ | 80% or less | — | $0 | $0 |
Read the steps in that table carefully, because they create real strategy. The premium drops in chunks, not smoothly: crossing from 89% to 90% loan-to-value, or from 94% to 95%, changes the rate on your entire mortgage. On the $500,000 example, moving from 5% down to 10% down cuts the premium by $5,050. Choosing a 30-year amortization adds a 0.25% surcharge — the 5%-down premium becomes 4.25%, or $20,188 on that same home. Premiums are also calculated on the mortgage after any premium from a previous port in some situations and are generally not refundable if you sell early; treat the premium as a sunk cost of buying with less than 20% down.
The premium itself is almost never paid upfront — it is added to your mortgage balance, so a $475,000 mortgage becomes $494,000 and you pay interest on the premium over the life of the loan. But Ontario charges 8% provincial sales tax on the premium, and that tax cannot be added to the mortgage. It is due in cash on closing day: $1,520 on the 5%-down example above. It is a small line that blindsides buyers precisely because everything else about the premium is invisible inside the mortgage. The land transfer tax calculator shows the PST automatically with every estimate, and the closing costs guide puts it in the full closing-day picture.
It often survives a move. If you sell and buy another home, many insured mortgages can be "ported" — the insurance (and sometimes the mortgage itself) moves to the new property, and you pay only a top-up premium on any increase in the loan. Whether your specific mortgage qualifies depends on the insurer and the new property, but it means the premium is not always a one-and-done sunk cost the way the closing-day paperwork makes it feel. Ask your lender about portability before assuming a move means a brand-new premium at whatever your new loan-to-value turns out to be.
You do not choose the insurer, but the price is the same. CMHC, Sagen, and Canada Guaranty compete for lenders' business, not yours — your lender picks which insurer backs your mortgage, and the standard premium schedule is effectively identical across the three, so the choice rarely changes what you pay. Where it can matter is underwriting flexibility: the insurers' guidelines differ slightly at the edges (self-employment documentation, property types, credit exceptions), which is one reason one lender can approve a file another declined. If an application is refused on insurance grounds, a broker submitting it to a lender who uses a different insurer is a legitimate second attempt, not a loophole.
Sometimes — but run the whole math, not just the premium. Waiting to save 20% avoids the premium and the PST, but it also means more months of rent and exposure to price moves, and insured borrowers frequently qualify for lower rates than uninsured ones, which claws some of the premium back every single month. The honest comparison is your specific price, down payment, and timeline. The affordability calculator builds the premium into its approval math, and the payment calculator shows exactly what the premium does to your monthly payment once it is folded into the loan. What you should not do is be surprised by it: on a typical first purchase in Ontario, CMHC insurance plus its PST is a five-figure planning item, and it belongs in the budget from the first day of the search.
The premium is built into the approval math — see what you qualify for with it included.
Open calculator →See what the premium does to your monthly payment once it is added to the loan.
Open calculator →Shows the CMHC premium and its 8% Ontario PST beside your land transfer tax.
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