CMHC Mortgage Default Insurance

CMHC (Canada Mortgage and Housing Corporation) mortgage default insurance is federally regulated insurance required when a borrower's down payment is less than 20% (as of 2026-07-27 — verify current) of a home's purchase price. The insurance protects the lender—not the borrower—against default, but enables home purchases with smaller down payments. CMHC is a federal Crown corporation; alternatives include Sagen and Canada Guaranty, which are private insurers offering similar products under federal rules.

CMHC mortgage default insurance protects the lender, not the borrower. If the borrower defaults and the property is sold for less than the outstanding mortgage balance, CMHC reimburses the lender for the shortfall. The borrower remains liable for any deficiency and does not receive coverage for their own loss of equity or credit damage.

The CMHC premium ranges from approximately 2.8% to 4.0% (as of 2026-07-27 — verify current) of the insured mortgage amount, depending on the size of the down payment; smaller down payments result in higher premium percentages. The premium is typically added to the mortgage principal and amortized over the loan term. Verify current premium rates and calculation methods directly with CMHC or a licensed mortgage professional before proceeding.

Yes. Federal rules administered by the Office of the Superintendent of Financial Institutions (OSFI) require that any residential mortgage with a loan-to-value ratio above 80% (i.e., down payment below 20% as of 2026-07-27 — verify current) be insured by an approved mortgage insurer such as CMHC, Sagen, or Canada Guaranty. This requirement applies uniformly across Canada, including BC, and is a condition for federally regulated lenders to extend high-ratio mortgages.

Private or non-federally regulated lenders in BC are not bound by OSFI's mortgage insurance requirements and may offer uninsured high-ratio mortgages. However, such mortgages typically carry significantly higher interest rates, fees, and stricter terms to compensate the lender for the additional risk. Verify the full cost, regulatory protections, and your obligations with a BC lawyer, notary, or licensed mortgage professional before proceeding with a private lender.

No. The CMHC premium is calculated as a percentage of the insured mortgage amount and is added to your mortgage principal; it does not reduce the purchase price or increase your equity. Your down payment must still meet the minimum threshold (e.g., 5% on the first $500,000 and 10% on amounts above $500,000, as of 2026-07-27 — verify current) before the CMHC premium is calculated and added to the loan.

No. BC's Property Transfer Tax Act, RSBC 1996, c. 378, levies tax on the fair market value or purchase price of the property interest being transferred. The CMHC insurance premium is a separate financing cost added to the mortgage and is not part of the property's value or the registered transfer, so it is not subject to Property Transfer Tax. Verify your specific transaction details with a BC lawyer or notary.

Generally, no. CMHC mortgage default insurance premiums are paid upfront (or financed into the mortgage) and the insurance remains in place for the life of that insured mortgage, even after you reach 20% equity (as of 2026-07-27 — verify current). You cannot cancel the insurance or receive a refund simply because equity has increased, though refinancing or switching lenders may result in a new mortgage that does not require insurance if you meet conventional loan-to-value ratios at that time. Verify refinancing implications and costs with a licensed mortgage professional and a BC lawyer or notary.

No. CMHC mortgage default insurance is a financing arrangement between you, your lender, and the insurer; it does not affect your property's assessed value, municipal property taxes, or eligibility for the BC Home Owner Grant under the Home Owner Grant Act. Property tax and grant calculations are based on assessed value, use, and residency status, not on your mortgage structure or insurance.

Current CMHC premium rates, loan-to-value thresholds, and eligibility criteria are published by the Canada Mortgage and Housing Corporation at www.cmhc-schl.gc.ca and by the Financial Consumer Agency of Canada (FCAC) at www.canada.ca/en/financial-consumer-agency. Because rates, maximum purchase prices, and rules change periodically (as of 2026-07-27 — verify current), confirm the details applicable to your purchase date and circumstances with a licensed mortgage professional, BC lawyer, or notary before finalizing your transaction.