If you're buying with less than 20% down, you'll pay a mortgage insurance premium. Most buyers find out what it is from the lender, a week before signing, as one line on a commitment letter. It deserves more attention than that. The premium is often the single biggest cost of buying besides the home itself, and the way it's priced creates a few spots where a small change to your down payment is worth thousands.
What the premium actually is
Mortgage default insurance protects the lender, not you. If a borrower with a high-ratio mortgage stops paying and the sale of the home doesn't cover the loan, the insurer pays the lender the difference. Federally regulated lenders are required to have it on any mortgage above 80% of the home's value.
There are three insurers in Canada: CMHC, Sagen and Canada Guaranty. Their premium schedules are practically identical, and your lender picks which one to use. People call it all "CMHC insurance" regardless.
You pay the premium, but not in cash. It's added to the mortgage and paid off over the amortization along with everything else. In BC there's no provincial sales tax on it. That's different from Ontario, Quebec and Saskatchewan, where buyers pay provincial tax on the premium in cash at closing. You'll see that tax mentioned in plenty of online articles written for Toronto buyers, and it doesn't apply here.
CMHC's premium schedule
The premium is a percentage of the mortgage amount, and the percentage depends on your loan-to-value ratio: the loan divided by the price.
| Loan-to-value | Down payment | Premium on the 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%, borrowed | 4.50% |
How your premium is calculated
There are three steps. First, subtract the down payment from the price to get the loan. Next, divide the loan by the price to find your tier. Finally, multiply the loan by that tier's rate.
On a $799,000 Langley townhouse with $79,900 down, that means a loan of $719,100. That's exactly 90% of the price, so it falls in the 3.10% tier, and the premium is $22,292. The mortgage you actually sign for is $741,392.
Three rules can change the answer:
- Minimum down payment. It's 5% of the first $500,000 of the price and 10% of the part between $500,000 and $1.5 million. On this townhouse that's $54,900. A lower down payment isn't an option at all.
- The $1.5 million cap. At $1.5 million and above, insurance isn't available and you need 20% down.
- The 30-year surcharge. If you're a first-time buyer or buying a new build, you can choose a 30-year amortization. That adds 0.20% to the premium rate. On the townhouse, the premium would be 3.30%, or $23,730.
The tier edges
The premium rate applies to the whole loan, not just the portion above 80%. So when a small change in down payment moves you across a tier line, the premium on the entire mortgage changes at once.
| $799,000 townhouse | Down payment | Tier | Premium |
|---|---|---|---|
| Minimum down | $54,900 (6.87%) | 4.00% | $29,764 |
| 10% down | $79,900 | 3.10% | $22,292 |
| 15% down | $119,850 | 2.80% | $19,016 |
| 20% down | $159,800 | none | $0 |
Here's what that means in practice. Put $79,000 down and your loan-to-value is 90.11%, which lands you in the 4.00% tier. Add $900 more and you're in the 3.10% tier, with a premium $6,508 lower. That $900 is the best-paid money in the whole transaction.
The chart in the calculator shows these drops for your price. The table under it tells you exactly how much cash reaches each tier, and what each extra dollar saves.
What the premium costs once interest is added
Because the premium sits inside the mortgage, you pay interest on it for the whole amortization. On the townhouse at 4.34% over 25 years, the $22,292 premium adds about $121 to every monthly payment. By the end of the amortization it has cost about $36,400, of which roughly $14,100 is interest on the premium itself. On a 30-year amortization, with the higher premium and five more years of interest, the interest alone comes to about $18,600.
None of that is a reason to avoid insurance. It's a reason to measure it properly, which is what the next section does.
The expensive last slice of your mortgage
Here's a way to look at the premium that most calculators skip. Going from 20% down to 10% down means borrowing an extra $79,900 on the townhouse. That extra borrowing isn't charged at your mortgage rate. It's charged at your mortgage rate plus the premium on the entire loan. If you work out what that costs as a yearly rate over a normal five-year term, the numbers are eye-opening.
| $799,000 townhouse at 4.34% insured | Extra borrowed | Effective yearly cost of that slice |
|---|---|---|
| Minimum down instead of 10% | $25,000 | about 11.1% |
| 10% instead of 15% | $39,950 | about 6.3% |
| 15% instead of 20%, same rate | $39,950 | about 14.7% |
| 15% instead of 20%, conventional at 4.64% | $39,950 | about 10.4% |
| 10% instead of 20%, conventional at 4.64% | $79,900 | about 8.5% |
Two things stand out. First, 15% to 19.99% down is the worst place to be per dollar. You pay a 2.80% premium on the entire mortgage to borrow the last 5%. If you're sitting at 17% down, reaching 20% is worth a lot more than it looks. Second, the 10% tier is relatively cheap. The step from 10% to 15% only saves 0.30% on the premium rate, so that slice costs about 6.3% a year.
What should you compare these rates to? Whatever that cash would otherwise earn, and how long it would take you to save it. If you can reach the next tier in a few months, waiting usually wins. If it would take years, rent, price changes and your own plans matter more than the premium. Our rent vs buy calculator is built for that question. The calculator above shows the same effective rates for your own price and down payment.
Insured rates are lower, and that offsets some of it
Lenders give insured mortgages their best rates because the insurer is carrying the default risk. On September 29, 2026, RBC's advertised 5-year fixed was 4.74% with less than 20% down and 5.04% with 20% or more. That 0.30-point gap is why the calculator's default conventional rate sits 0.30 above the insured one. The lowest advertised rates anywhere in the market are almost always for insured files.
The rate advantage doesn't cancel out the premium, but it softens it. On the townhouse, the effective cost of going from 20% down to 10% down drops from about 10.7% a year with equal rates to about 8.5% with the 0.30-point gap. If your lender's gap is wider, put your own rates into the calculator. Current rates are on our BC mortgage rates page.
Presales: the appraisal can move your tier
Lenders work out loan-to-value on the lower of the purchase price and the appraised value. With a resale home, the two are usually close. With a presale, you sign today and the lender appraises years later at completion, and in a flat market the appraisal can come in below the contract price.
Say you buy a $749,900 presale condo planning 10% down, $74,990. That would give you a $674,910 mortgage and a 3.10% premium of about $20,922. At completion the unit appraises at $700,000. Your planned loan is now 96.4% of the appraised value, which is over the 95% limit, so it can't be insured at all.
To close, you'd need at least $84,900 of your own money, which is $9,910 more than planned. That takes the loan to $665,000, in the 4.00% tier, with a premium of $26,600. To stay in the 3.10% tier you'd have to bring $119,900. That's almost $45,000 more than you planned, and it sits on top of GST and the transfer tax.
If you're buying a presale with a small down payment, keep a buffer, and look at comparable completed units before completion day. Our presale guide covers the rest of the completion-day math.
Getting to the next tier: where the extra money usually comes from
When a buyer is a few thousand dollars short of 10%, 15% or 20%, the money usually comes from one of four places:
- An FHSA. Up to $8,000 a year, to a $40,000 lifetime limit, tax-deductible going in and tax-free coming out for a first home.
- The RRSP Home Buyers' Plan. Up to $60,000 per person.
- A gift from immediate family. It comes with a signed gift letter confirming it doesn't have to be repaid.
- A slightly lower price. On a $799,000 home, negotiating $5,000 off moves the 10% line by $500. That can be enough if you're sitting right at the edge.
Timing matters. Lenders usually want to see where the down payment has been sitting for about 90 days, with gifts documented separately. Arrange it before you apply, not the week before closing.
Paying the premium in cash, or putting the cash toward your down payment
Some lenders let you pay the premium up front instead of adding it to the mortgage. If you have the cash, don't pay the premium with it. Add it to your down payment instead, because a bigger down payment also shrinks the premium.
Take the townhouse with $22,292 of spare cash. Pay the premium in cash and your mortgage is $719,100. Add the same $22,292 to the down payment instead and your down payment becomes $102,192. The loan drops to $696,808 and the premium falls to $21,601. With the premium added, the mortgage is $718,409, which is $691 less than paying the premium in cash.
The gain is much bigger if the extra cash carries you into a lower tier.
Moving within two years? Your premium may follow you
CMHC insurance is portable. There are two cases:
- Straight portability. You sell and buy another home. The balance doesn't go up, the loan-to-value on the new home is the same or lower, and the amortization doesn't get longer. In that case you don't pay a new premium at all.
- Portability with an increase. If the new mortgage is bigger, CMHC gives you a credit for the premium you paid, based on how recently you bought: 100% of the old premium within 6 months, 50% within 12 months and 25% within 24 months. As an alternative, you can pay a premium only on the increase to the loan, at 6.20% to 6.30% depending on the loan-to-value, plus a 0.60% surcharge on the increase if the amortization is blended. You pay whichever option is lower.
Here's an example of the credit. A family paid a $19,000 premium on a Langley townhouse. They sell and buy a $1.1 million house in Clayton with 10% down, so the new loan is $990,000 and the full premium on it would be $30,690. If they apply within six months of the first purchase, the $19,000 credit brings the new premium down to $11,690. At twelve months, the credit is worth $9,500 instead of $19,000.
If you think you might move up soon, tell your lender and your REALTOR® early. The clock runs from the original closing date.
The energy-efficient refund
CMHC refunds 25% of the premium when you buy or build an energy-efficient home, or make qualifying energy-saving upgrades. Sagen and Canada Guaranty run similar programs. On the townhouse, that's a refund of about $5,573. The paperwork usually comes from the builder, or from an energy advisor's EnerGuide evaluation, and the claim goes through your lender. It's a genuinely useful refund that very few buyers ask about. Tick "energy-efficient home" in the calculator to see yours.
When insurance isn't available
Mortgage insurance on a purchase with less than 20% down isn't available in these cases:
- The price is $1.5 million or more.
- You're refinancing, with one exception: CMHC's program for adding secondary suites.
- The home is a single-unit rental you won't live in.
- You're choosing a 30-year amortization but you're neither a first-time buyer nor buying a new build.
At least one borrower also needs a credit score of 600 or better, and you still need to pass the lender's debt-service limits at the stress-test rate. Rentals with 2 to 4 units have their own CMHC schedule, with a maximum loan of 80% of the value.
In BC the $1.5 million cap has the most bite. A $1,499,000 home needs $124,900 down, with a 4.00% premium of about $54,964. A $1,500,000 home needs $300,000 down and no premium. Our affordability calculator shows which of those limits you'd hit first.
Mistakes we see with mortgage insurance
Budgeting on the loan without the premium. On a $700,000 loan with 10% down, the premium is about $21,700. That's money you'll be paying interest on for decades.
Stopping just short of a tier. 9.9% down instead of 10%, or 19.5% instead of 20%. Always check the tier edges before you finalize the down payment.
Paying the premium in cash. The same cash does more work as down payment.
Assuming BC charges sales tax on the premium. It doesn't. That's an Ontario, Quebec and Saskatchewan cost.
Forgetting the portability credit. If you're selling and buying within two years, ask about it before you sign a new mortgage.
Not asking about the energy-efficient refund on a new build. It's 25% of the premium, and the builder usually has the paperwork.
Questions people ask us
How much is CMHC insurance on a $800,000 home in BC?
It depends on the down payment. With 10% down ($80,000), the loan is $720,000 and the premium is 3.10%, or $22,320. With the minimum of $55,000 down, the premium is 4.00% of $745,000, or $29,800. With 15% down it's 2.80% of $680,000, or $19,040. With 20% down there's no premium. Add 0.20% to the rate for a 30-year amortization.
Is there PST on CMHC insurance in BC?
No. BC doesn't charge provincial sales tax on mortgage insurance premiums. Buyers in Ontario, Quebec and Saskatchewan pay provincial tax on the premium in cash at closing, but BC buyers don't.
Is the CMHC premium paid up front or added to the mortgage?
It's normally added to the mortgage and paid off with it. Some lenders let you pay it in cash, but it's usually better to add that cash to your down payment, because a smaller loan also means a smaller premium.
Do I get the CMHC premium back if I sell or pay off my mortgage?
No, the premium isn't refundable. But if you buy another home and insure the new mortgage with CMHC again, you may get a credit: 100% of the previous premium within 6 months, 50% within 12 months and 25% within 24 months. With straight portability, no new premium is charged.
How much does a 30-year amortization add to the premium?
0.20% of the loan amount. On a $719,100 loan at 10% down, the rate goes from 3.10% to 3.30%, and the premium from $22,292 to $23,730. Thirty-year insured amortizations are available to first-time buyers and buyers of new builds.
Can I avoid CMHC insurance with less than 20% down?
Not with a regular lender. Federally regulated lenders must insure any mortgage above 80% of the home's value. Some buyers use a second mortgage or private lending to avoid it, but those carry much higher rates and usually cost more than the premium.
Are Sagen and Canada Guaranty cheaper than CMHC?
Their premium schedules are practically the same as CMHC's, and the lender chooses the insurer, not you. There are small differences in programs, such as how they treat borrowed down payments, but the price you pay is essentially identical.
What is the energy-efficient premium refund?
CMHC refunds 25% of the premium when you buy or build an energy-efficient home or make qualifying energy upgrades. Sagen and Canada Guaranty offer similar refunds. On a $22,292 premium, that's about $5,573. Your lender submits the claim with documentation from the builder or an energy advisor.
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Sitting close to a tier edge?
If you're a few thousand dollars from 10%, 15% or 20%, there's usually a way to get there: the timing of a gift, an FHSA withdrawal, or a slightly different price. Send your numbers and Dan will look at it with you and connect you with a broker for the pre-approval.
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