CMHC Insurance

Mortgage default insurance, commonly referred to as CMHC insurance, is mandatory in Canada for down paymentsbetween 5% (the minimum in Canada) and 19.99%. Mortgage default insurance protects lenders if a homeowner defaults on their mortgage. To understand how it is calculated and paid for, watch the video below.



Although mortgage default insurance costs homebuyers 1.75% - 2.75%1 of their mortgage amount, it is actually beneficial to the buyer market. Without it, mortgage rates would be higher, as the risk of default would increase. Lenders are able to offer lower mortgage rates when mortgages are protected by default insurance, as the risk of default is spread across multiple homebuyers.

On July 9th, 2012, the Canadian government made 2 key changes to CMHC insurance regulation:
1. CMHC insurance will not be available on homes >$1 million, requiring purchasers to put at least 20% down.
2. The maximum amortization period offered on CMHC-insured mortgages is 25 years.

1: Rates updated to reflect newest mortgage rule changes as of July 9th 2012.

In Canada, mortgage default insurance is provided by CMHC (Canada Mortgage and Housing Corporation),Genworth Financial and Canada Guaranty Mortgage Insurance

We encourage our users to educate themselves on this topic and its intricacies. We recommend that users speak to a government representative, a licensed Realtor and a real estate lawyer.

DISCLAIMER: and accepts no responsibility for any loss arising from any use or reliance on the information contained or produced through calculative function as described or found on pages linked to from this article.  


Andrew McCrea

Andrew McCrea

Sales Representative
CENTURY 21 United Realty Inc., Brokerage*
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