CMHC Mortgage Insurance, Down Payments & LTV Explained

What is CMHC mortgage insurance?

CMHC insurance protects the lender, not the borrower. When your down payment is below 20%, lenders are required to insure the mortgage. The insurer guarantees the lender will be reimbursed if you default. In exchange, you pay a premium that is added to your mortgage amount.

• You can buy with as little as 5% down (for homes ≤ $500k).
• Insurance premiums range from about 2.8% to 4.0%of your mortgage amount.
• Premiums are usually rolled into your mortgage, not paid upfront.

Minimum down payment rules in Canada

Canada uses a tiered structure for minimum down payment:

• 5% on the first $500,000
• 10% on the portion between $500,001 and $999,999
• Homes over $1M are not CMHC-insurable and require a full 20% down

Loan-to-Value Ratio (LTV)

LTV is one of the most important mortgage risk indicators:

LTV = Mortgage Amount ÷ Home Price

• LTV above 95% is not allowed (minimum down is 5%).
• LTV above 90% means a higher insurance premium.
• LTV below 80% avoids CMHC insurance entirely.

Lower LTV means you borrow less relative to the home price, which often increases your approval odds and lowers your payments.

How insurers decide if you qualify

Insurers look closely at your:

• GDS and TDS ratios
• Credit score and payment history
• Employment stability
• Property type and location

Our calculator uses a statistical model to approximate this.