CMHC Mortgage Insurance: Who Qualifies and What You Get
Learn how mortgage insurance helps you buy a home with a smaller down payment in Canada.
This scheme provides mortgage insurance for people buying a home who do not have a large enough down payment to meet standard requirements.
Who it's for
This option is specifically designed for homebuyers who do not have a down payment of at least 20% of the total purchase price. If you are looking to enter the housing market but cannot afford to put down a fifth of the home's value upfront, this insurance may be required for your loan.
What you get
The primary benefit of this insurance is that it allows you to purchase a home with a much smaller upfront payment. Instead of needing a massive amount of savings, you can qualify for a mortgage with a down payment as low as 5%. This makes homeownership more accessible for those who have been saving but haven't reached the 20% threshold.
What it costs you
You do not typically pay this insurance as a separate, one-time fee upfront. Instead, the cost is treated as a premium that is added to your mortgage principal. Because it is added to the principal, it becomes part of the total amount you owe and will be paid back over the life of your mortgage.
The catch to know
There is a common misunderstanding regarding who this insurance is actually for. While it helps you get a loan, the insurance is designed to protect the lender, not you. If you run into financial trouble and cannot make your payments, the insurance covers the lender's loss, rather than covering your personal costs.
How to apply
- Consult with your mortgage lender or broker to discuss your down payment options.
- Verify the exact amount you have saved to see if it meets the 20% threshold.
- If your savings are below 20%, ask your lender to calculate the insurance premium.
- Work with your lender to have the premium added to your mortgage principal.