CMHC mortgage insurance: what it costs and when you pay it

On a $650,000 home purchase in Ontario with the stepped minimum down payment ($40,000), CMHC insurance adds $24,400 to your mortgage balance and requires $1,952 in cash at closing, on top of your down payment. Your actual loan becomes $634,400, not $610,000, and you carry that extra balance for the full 25-year amortization. This article walks through exactly how the premium is calculated, what Ontario's provincial tax on it means in practice, and what the payment difference looks like compared to a conventional loan at the same rate. It's for Canadian buyers putting less than 20% down who want to know the real cost before they sign.

The scenario modeled

The purchase is a $650,000 home in Ontario. The buyer puts the stepped minimum down payment of $40,000 (6.15%), which triggers CMHC insurance at the 4.00% premium tier. The CMHC premium is calculated on the loan amount, not the purchase price.

The $24,400 premium is added to your mortgage and amortized over 25 years. The $1,952 Ontario tax is due at closing in cash. It does not get rolled into the loan.

For comparison, the article also models a conventional purchase of the same property with 20% down ($130,000), which requires no CMHC insurance.

For a $650,000 purchase: 5% of $500,000 = $25,000, plus 10% of $150,000 = $15,000. Minimum down payment = $40,000. That is the amount used in this scenario, not a flat 5% of the full price.

The findings

The CMHC-insured mortgage starts with a principal $114,400 higher than the conventional loan. At 5.10%, the monthly payment on the insured mortgage is $3,726, versus $3,054 on the conventional loan. That's $672 more per month.

Over the 5-year term, the insured borrower pays $151,524 in interest. The conventional borrower pays $124,200. The gap is $27,324.

Over the full 25-year amortization at the same rate, the insured borrower pays $483,370 in total interest. The conventional borrower pays $396,205. The insured borrower pays $87,165 more, almost entirely because the $24,400 premium is part of the balance earning interest for two and a half decades.

The conventional buyer also needed $130,000 at closing versus $41,952 ($40,000 down + $1,952 PST). The insured path costs more over time, but it gets you into the property with far less cash upfront. That's the core trade-off, not a flaw in the product.

Canadian context

CMHC insurance is required by federal law for any insured mortgage in Canada, which covers any purchase where the down payment is less than 20% of the purchase price. The Canada Mortgage and Housing Corporation sets the premium tiers, and they have not changed since 2017. Provincial sales tax on the premium applies in Ontario, British Columbia, and Quebec, and those rates are set by the provinces, not CMHC.

Source: Canada Mortgage and Housing Corporation, "CMHC Mortgage Loan Insurance," accessed May 2026. URL: https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers

When this applies - and when it doesn't

This scenario applies when: You are buying in Ontario with the stepped minimum down payment and a purchase price between $500,000 and $999,999. The 4.00% premium tier applies to any down payment between 5.00% and 9.99% of the purchase price, regardless of the price itself, as long as the home is under $1,000,000 (the upper limit for insured mortgages in Canada).

The numbers change if:

You are in British Columbia or Quebec. The PST rate differs: BC charges 7% on the premium, Quebec charges 9%. On a $24,400 premium, that's $1,708 (BC) or $2,196 (QC) due at closing instead of $1,952.

You put 10% down instead of the minimum. The premium drops to 3.10%, which on a $585,000 base loan is $18,135, not $24,400. Your rolled-in mortgage becomes $603,135 and the Ontario PST falls to $1,451.

Your purchase price is above $999,999. CMHC insurance is not available for purchases at $1,000,000 or above. You need a minimum 20% down payment for any home at that price, full stop. There is no insured path.

You are buying outside Ontario, BC, or Quebec. No provincial tax applies on the premium. The premium still gets rolled in, but nothing is owed in cash beyond your down payment and closing costs.

The scenario does not apply if you already have 20% down. Conventional financing has no CMHC premium and no PST. The only cost comparison is the rate you get, which is often marginally higher for insured mortgages at some lenders because CMHC insurance reduces the lender's risk, not yours.