CMHC insurance

CMHC insurance — generically, mortgage default insurance, also sold by Canada’s private insurers — is the insurance a lender must carry on a high-ratio mortgage: one with a down payment under 20%. The borrower pays the premium; the lender receives the protection; and the arrangement is what makes small-down-payment homeownership possible at mainstream rates in Canada.

The rules that frame it

Insured lending comes with eligibility guardrails set by federal policy: minimum down payments that step up with price bands, a maximum insurable purchase price, amortization limits (with carve-outs policymakers adjust — first-time buyers and new builds have been recent beneficiaries), and qualification under the insured-side stress test. These dials move with housing policy more often than any other numbers in this glossary — treat every specific threshold as check-before-quoting.

The economics for a buyer

The premium is a percentage of the loan that rises as the down payment shrinks, added to the mortgage and paid off over the amortization — plus sales tax on the premium in cash at closing where applicable. Counter- intuitively, insured mortgages often carry lower contract rates than conventional ones, because the lender’s risk is covered; the all-in comparison between 19% down uninsured and 20% down conventional is genuinely worth running both ways with a broker.

Why it matters for your practice

Default insurance is the machinery under every first-time-buyer conversation you’ll ever have. Explaining what the premium buys — and who it actually protects — is the difference between an agent who repeats bank vocabulary and one who translates it.