What Changes With CMHC Mortgage Loan Insurance When You Put Down Less Than 20%

Noah had just gotten his offer accepted on a $400,000 condo. With a 10% down payment, $40,000, he figured he’d done his homework. Then his lender’s closing estimate arrived, with a line he hadn’t seen coming: “Mortgage loan insurance premium—$11,160.”

His first reaction was to assume it was an error, or a fee he could simply decline. It’s neither. It’s a direct consequence of his down payment, mandatory in his case, and calculated using a precise grid.

As soon as a down payment falls below 20% of the purchase price, what’s called a high-ratio mortgage, the lender requires mortgage loan insurance. Three insurers share this market in Canada: CMHC (the public insurer), Sagen and Canada Guaranty (the two private insurers). The borrower doesn’t choose which of the three insures the loan, the lender assigns it.

A point we always clarify with our clients: this insurance protects the lender against default, not you or your family. It’s not the same thing as the life or disability insurance your bank might offer you at signing, that one protects your loved ones, not the lender’s balance.

The premium is calculated as a percentage of the loan amount (not the purchase price), based on the loan-to-value ratio:

For Noah: with a 10% down payment, his loan-to-value ratio is 90%, in the 3.10% bracket. On his $360,000 loan, the premium comes to $11,160. The good news: this premium can be added to his mortgage and amortized over the life of the loan, rather than paid in cash.

In Quebec, a provincial tax on insurance premiums applies on top of the premium itself. Unlike the premium, this tax must be paid in cash, on closing day: it can’t be financed with the rest of the loan.

The current rate is 9%. For Noah, that’s an extra $1,004 he needs available in cash on signing day, on top of his down payment and other closing costs.

Worth watching if your purchase is close to year-end 2026: according to Revenu Québec, this rate rises to 9,975% for any premium paid after December 31, 2026, as part of a harmonization with the QST rate. For a file otherwise identical to Noah’s, that’s roughly a hundred dollars more.

Mortgage loan insurance only exists for properties under $1.5 million (the cap was raised to this level in December 2024). Above that, it simply isn’t available: a minimum 20% down payment becomes mandatory. Below that cap, the minimum down payment also follows tiers: 5% on the first $500,000 of the purchase price, then 10% on the portion between $500,000 and $1,499,999.

What to remember

The exact amount of your premium and the tax that comes with it depends on your down payment and target price, both things we can calculate precisely with you before you even make an offer. Our team can review your file and show you exactly what it changes for the cash you’ll need available at closing. Let’s talk it through together. As you probably already know, our services are free.