CMHC Insured Mortgage Ontario: Buy With 5% Down

CMHC mortgage insurance, also called mortgage default insurance, protects the lender if a borrower stops paying. Lenders require it on mortgages with less than 20% down. You pay the premium, which is a percentage of your mortgage and is usually added to it. CMHC is one of the mortgage default insurance providers in Canada, along with private insurers.

The premium is a percentage of your mortgage, based on your loan-to-value ratio. With a traditional down payment, CMHC's premium is 4.00% at 90.01% to 95% loan-to-value (5% to 9.99% down), 3.10% at 85.01% to 90%, and 2.80% at 80.01% to 85%. A non-traditional down payment at 90.01% to 95% is 4.50%, and an amortization beyond 25 years adds 0.20%. For example, on a $500,000 purchase with 5% down, the mortgage is $475,000 and the premium is $19,000. See our full guide to CMHC premiums for every tier.

Yes. Ontario charges 8% sales tax on the mortgage insurance premium. The tax can't be added to your mortgage, so you pay it in cash at closing. On a $19,000 premium, that is $1,520. Your lender and lawyer will confirm the exact amount.

For an insured purchase, the minimum is 5% of the first $500,000 of the price and 10% of the portion between $500,000 and $1.5 million. Homes at $1.5 million or more need 20% down. For example, on a $750,000 home the minimum is $50,000. A 3 to 4 unit property you live in needs at least 10% down, and a rental property that you don't live in generally needs at least 20%.

They can be. Because the insurer covers the lender's risk, lenders may price insured mortgages differently from uninsured ones. The difference changes with the lender and the market, so we compare both options on your file.

Yes. With 20% or more down, mortgage default insurance isn't required, so you avoid the premium. The trade-off is more cash up front. Whether it makes sense depends on your savings, your rate and what else that cash could do for you. We compare both options with you.

No. It protects the lender, not you. It doesn't cover your payments if you lose income and it is not life or disability insurance. For personal coverage, speak with a licensed insurance advisor. What mortgage insurance does is let you buy with a smaller down payment.

Often, yes. CMHC states there is no minimum period of residency for its newcomer program. Permanent residents can access its homeowner products, and non-permanent residents who are legally authorized to work in Canada can apply for homeowner loans. Lenders generally look at credit history, and CMHC may consider an international credit report or a reference letter from your bank abroad. Rules on purchases by non-Canadians may apply, and lenders set their own criteria, so we confirm eligibility first.

All three provide mortgage default insurance in Canada. CMHC is a federal Crown corporation, while the other default insurers are private companies. The lender generally selects the insurer, and each has its own guidelines and programs, so a file that fits one may not fit another. We match your file to a lender that fits. See our comparison of default insurers for more.

Mortgage insurance is mainly used for purchases. For a rental you don't live in, CMHC's small rental program covers up to 4 units and generally needs at least 20% down. Most refinances are capped at 80% of your home's value, so lenders generally need at least 20% equity to remain. We review your situation before recommending a path.