Mortgage CMHC Insurance Calculator

Saving for a down payment is a substantial hurdle that many buyers face. Mortgage default insurance can help make homeownership more accessible. CMHC provides mortgage default insurance which is a type of insurance that allows borrowers to qualify for a mortgage with a smaller down payment. 

To help you determine how much you will need to pay for this insurance you can use the CMHC mortgage calculator. This calculator is a handy tool that will help you calculate the cost of CMHC mortgage insurance and the impact it has on your total mortgage amount. This free tool will help make it easy for you to plan ahead.

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Key Takeaways

• Mortgage default insurance allows buyers to purchase with a smaller down payment.
• The premium you will pay is determined by the loan-to-value (LTV) ratio.
• A larger down payment can help you save on insurance premiums.

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Understanding Mortgage Default Insurance (CMHC)

Mortgage default insurance reduces some of the risks to lenders when you have less than 20% to put toward a downpayment. This insurance was introduced as a way to allow buyers to purchase properties without the need to wait until they had 20% saved on the purchase price of a qualifying home. Mortgage default insurance protects the lender in case you default on your mortgage payments. This means that if you were to ever stop making mortgage payments the lender can recover the remaining mortgage balance at the time of default. 

Qualifying for Mortgage Default Insurance

Mortgage default insurance is required by lenders for all mortgages when a down payment of less than 20% is put down and the purchase price is under $1 million. 

In Canada, the minimum down payment required to purchase a home is 5% on the first $500,000 and 10% on the remaining amount. 

Down payments totalling 20% or more of the purchase price do not require you to have mortgage default insurance. 

There are advantages to having a mortgage that is default insured. You will have access to more competitive rates as this insurance reduces risk to lenders. 

Plus the benefit of having the ability to purchase a property without the need to save 20% of the purchase price as a down payment. 

Properties that are priced at $1 million or more do not qualify for mortgage default insurance and will require a minimum 20% down payment. 

Additionally, properties intended to be used as rentals, as well as transactions that include refinances or setting up second mortgages and mortgages amortized for more than 25 years are not eligible to be insured. 

How to Use the CMHC Mortgage Default Calculator

The mortgage insurance calculator tool allows you to input the details of the home you wish to purchase and calculates how much mortgage default insurance you will pay based on your mortgage and down payment amount. 

The mortgage default insurance calculator is easy to use and can help potential homebuyers calculate the total mortgage they will need and how much to budget for mortgage default insurance. To get started you’ll need to provide the purchase or asking price of the home, the province in which the home is located, and the down payment amount(s) to calculate the mortgage insurance cost. 

Purchase (Asking) Price: Enter the purchase or asking price of the home. 

Province: Select the province in the drop-down where the home is located.

Down Payment: This is the percentage or dollar amount of the purchase price you have ready for a down payment. 

CMHC Mortgage Insurance: This is the mortgage insurance premium you will pay based on the information you have input. 

Total Mortgage Amount: This is the total mortgage amount you will need that accounts for mortgage default insurance. 

Helpful Calculator Tips 

Down payment: You can either run scenarios using a set percentage (ex. 5%, 10%, 15%) which will calculate the dollar amount or if you have an exact down payment figure you can use this amount and it will automatically calculate the percentage you are putting down and whether mortgage default insurance will be necessary.

Provincial Sales Tax: If this box appears this means you reside in a province that must collect provincial sales taxes on the mortgage default insurance amount. This amount will be payable to your lawyer or notary. Although the province selected will not change the outcome of the default insurance premium, CMHC will confirm if provincial tax is due and how much you will need to put aside for this cost. Unlike your default insurance premium, the provincial tax cannot be rolled into your mortgage.

How to Calculate Your CMHC Mortgage Default Insurance

Mortgage default insurance premiums are determined by your loan-to-value (LTV) ratio. The higher your LTV ratio, the higher the CMHC premium will be. You can determine your LTV ratio by dividing the amount you are borrowing by either the appraised value of the home or the home’s purchase price whichever amount is lower.

Loan-to-Value (LTV)	Premium on Total Loan
80.01% to 85%	2.80%
85.01% to 90%	3.10%
90.01% to 95%	4.00%

To calculate your premiums say you are purchasing a $650,000 home with a 10% down payment. To calculate the mortgage amount:

$650,000 x 0.10 = $65,000

$650,000 – $65,000 = $585,000

This means with a 10% down payment your mortgage amount will be $585,000. 

Since you are putting down less than 20% this means you must add the mortgage insurance premium. From the above table, you can see that since you are putting down 10% that leaves a 90% LTV meaning you will pay a 3.1% premium on your mortgage loan. 

You can calculate the premium amount as $585,000 x 0.031 = $18,135

Your default insurance premium with a 10% down payment would be $18,135. 

This amount can either be paid upfront as a lump sum payment or added to your mortgage amount, upon your qualification for the higher mortgage amount. If you are adding the premium to your mortgage your lender would lend you the original mortgage amount plus the premium ($585,000 + $18,135 = $603,135) and a portion of this premium would then be paid off with each mortgage payment you make. 

Helpful tip: If you have the extra cash to pay for your default insurance premium upfront, doing so could save you a lot on interest-carrying costs from spreading your premium out over your amortization. If your lender does not allow this, then ensure you have the ability to apply that same amount as a prepayment after your mortgage is funded. The interest savings will amount to the same. 

How to Use the CMHC Default Insurance Calculator to Your Advantage

Use the CMHC insurance calculator to run scenarios with different down payment amounts to see how much you can save on mortgage default insurance premiums by using a larger down payment. The CMHC calculator allows you to input up to 3 different down payment amounts so you can compare and save. 

Also, keep in mind the LTV ratios and the impact they have on the premium you pay. If you have a 14% down payment saved up the premium you will pay (3.1%) is the same as the premium for putting down 10%. In this scenario, it may be best to try and boost your down payment to 15% of the purchase price to pay a lower default insurance premium (2.8%).

Helpful tip: If you have more than 20% saved towards your down payment but not more than 35%, it may be worthwhile to explore putting a down payment of 19.99% to get the more competitive default-insured mortgage rate from your lender. Then arrange to pay the insurance premium in cash to lower your interest-carrying costs which will amount to greater savings with this scenario over the life of your mortgage. 

Other Insurers That Offer Mortgage Default Insurance

CMHC is Canada’s main mortgage loan insurance provider. As a crown corporation, it was established as part of the Government of Canada’s effort to improve housing affordability for Canadians. There are, however, two private mortgage default insurance providers that also offer default insurance. 

Sagen (formerly Genworth) is Canada’s largest private mortgage default insurance provider. They’ve been providing private mortgage default insurance in Canada for over 35 years. 

Canada Guaranty is another private mortgage default insurer that has the advantage of offering products for self-employed borrowers or those with non-traditional sources of income. 

Frequently Asked Questions