Mortgage Guide
What mortgage default insurance is, what it costs at CMHC's current premiums, why BC buyers pay no sales tax on it, and how the December 2024 rule changes affect it.
If you are buying with less than 20% down, a line on your mortgage approval will show an insurance premium, often tens of thousands of dollars, added to what you borrow. That is mortgage default insurance. It is the price of buying sooner with a smaller down payment. This guide explains what it covers, what it costs at current CMHC rates, why BC buyers pay less tax on it than buyers in some provinces, and how the 2024 rule changes affect it.
Mortgage default insurance protects the lender, not you, if a borrower stops paying. In Canada it is generally required when your down payment is less than 20% of the purchase price. You pay the premium, which is calculated as a percentage of the mortgage amount. The Financial Consumer Agency of Canada's down payment page explains that a down payment below 20% means mortgage loan insurance is required.
It is not mortgage life or disability insurance. Those are optional products that pay your mortgage if something happens to you. Default insurance pays the lender if the loan goes bad. Because the lender's risk is covered, insured mortgages can be offered with as little as 5% down.
CMHC publishes its schedule on its premium information page. The premium is a percentage of the loan amount, based on loan-to-value (LTV), the mortgage as a share of the purchase price.
| Loan-to-value | Down payment | Premium on total loan |
|---|---|---|
| Up to 65% | 35% or more | 0.60% |
| 65.01% to 75% | 25% to 34.99% | 1.70% |
| 75.01% to 80% | 20% to 24.99% | 2.40% |
| 80.01% to 85% | 15% to 19.99% | 2.80% |
| 85.01% to 90% | 10% to 14.99% | 3.10% |
| 90.01% to 95% | 5% to 9.99% | 4.00% |
| 90.01% to 95%, non-traditional down payment | 5% to 9.99% | 4.50% |
The bands at 80% LTV and below apply when a lender chooses to insure a lower-ratio loan. For a buyer, the bands that matter are the three below 20% down. Other insurers set their own schedules. This guide uses CMHC's published figures.
CMHC's page adds: "An amortization period beyond 25 years is subject to a 0.20% surcharge." Yes. CMHC adds a 0.20% surcharge to the premium when the amortization is beyond 25 years. Since December 15, 2024, 30-year insured amortizations are available to first-time buyers and buyers of new builds.
Arithmetic using CMHC's schedule. These are not quotes, and your lender's figure is what counts.
| Down payment | Mortgage | LTV | Premium rate | Premium |
|---|---|---|---|---|
| $55,000 (the minimum) | $745,000 | 93.1% | 4.00% | $29,800 |
| $55,000, 30-year amortization | $745,000 | 93.1% | 4.20% | $31,290 |
| $80,000 (10%) | $720,000 | 90.0% | 3.10% | $22,320 |
| $120,000 (15%) | $680,000 | 85.0% | 2.80% | $19,040 |
| $160,000 (20%) | $640,000 | 80.0% | Not required | $0 |
Two things stand out. The premium rate falls at each band edge, so landing just over a threshold (10.00% down rather than 9.9%) changes the rate on the whole loan. And the premium can be added to the mortgage. When it is, you pay interest on it over the amortization. The minimum down payment for any price is in our guide: how much down payment do I need in BC?
No. CMHC says Ontario, Quebec and Saskatchewan currently apply provincial sales tax to mortgage loan insurance premiums. British Columbia is not on that list. In those provinces, CMHC notes, the sales tax "can't be added to the loan amount", so buyers there pay it in cash at closing. A BC buyer with the same premium avoids that extra cash cost. It is one of the few closing-cost advantages BC buyers have. It is easy to miss if you are reading national guides written for Ontario.
CMHC's general requirements set the main conditions:
The Department of Finance's September 2024 announcement defines a first-time buyer for this purpose as someone who "has never purchased a home before; in the last four years... has not occupied a home as a principal place of residence that either they themselves or their current spouse or common-law partner owned; or, ... recently experienced the breakdown of a marriage or common-law partnership." A new build "must not have been previously occupied for residential purposes."
That is a personal decision, and we won't pretend there's one right answer. The trade-off is time against cost. Insurance lets you buy with less saved, but adds a premium and interest on it. Waiting to reach 20% avoids the premium, while prices, rents and your circumstances keep moving. Some buyers use the band edges, for example finding enough extra to move from 9% to 10% down, to cut the rate on the whole loan.
Our insured vs uninsured comparison sets out the differences, and the mortgage payment calculator shows what a premium added to the balance does to your payment. When you are ready, start with our first-time home buyer mortgage page or book a pre-approval. Blue Sky Mortgage Group is a licensed BCFSA mortgage brokerage in Richmond: 778-991-3289.
Mortgage default insurance protects the lender, not you, if a borrower stops paying. In Canada it is generally required when your down payment is less than 20% of the purchase price. You pay the premium, which is calculated as a percentage of the mortgage amount.
CMHC's premium depends on your loan-to-value ratio. It is 2.80% of the loan from 80.01% to 85%, 3.10% from 85.01% to 90%, and 4.00% from 90.01% to 95%. It rises to 4.50% at 90.01% to 95% with a non-traditional down payment.
No. CMHC says Ontario, Quebec and Saskatchewan currently apply provincial sales tax to mortgage loan insurance premiums. British Columbia is not on that list.
Yes. CMHC adds a 0.20% surcharge to the premium when the amortization is beyond 25 years. Since December 15, 2024, 30-year insured amortizations are available to first-time buyers and buyers of new builds.
No. CMHC requires the purchase price to be below $1,500,000 for homeowner loans. At $1.5 million or more, you need at least 20% down and an uninsured mortgage.
Premiums and rules from CMHC, FCAC and the Department of Finance Canada, checked October 2026. Premiums can change. Confirm with your lender.
This is general information, not financial advice. Speak to a licensed mortgage professional about your situation.
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