Canada Mortgage and Housing Corporation (CMHC) Insurance: Who Qualifies and What You Get
Learn if you need mortgage insurance when buying a home in Canada and how it impacts your down payment and mortgage balance.
This insurance is a requirement for homebuyers in Canada who do not have a large enough down payment to cover a certain percentage of their home's value.
Who it's for
This is for homebuyers who are making a down payment of less than 20% of the total purchase price of their home.
What you get
By using this insurance, you are able to secure a mortgage even with a smaller down payment. This can lead to access to lower mortgage interest rates.
What it costs you
You do not pay this as a separate upfront bill. Instead, the premium is added to your total mortgage balance, meaning you will pay interest on that amount over the life of your loan.
The catch to know
The most important thing to understand is that this insurance protects the lender, not you. If you cannot make your payments, the insurance covers the lender's loss, rather than protecting your equity in the home.
How to apply
- Speak with your mortgage lender or broker about your down payment options.
- Determine if your down payment falls below the required threshold.
- Your lender will typically handle the insurance application process as part of your mortgage application.