When you put down only a little, the bank is taking a bigger chance. So it asks for mortgage default insurance1.
It's a safety net for the bank, not for you: if you can't pay, the insurance pays the bank. In return, you can buy a home with as little as 5% down. CMHC says it also helps people with small down payments get rates like people with bigger ones2. The insurance comes from CMHC, Sagen or Canada Guaranty.
Less than 20% down
- You pay a one-time insurance fee. Smaller down payment, bigger fee.
- The fee is usually added to your mortgage, or you can pay it up front.
- Some provinces add sales tax to the fee. You pay that tax right away; it can't go on the mortgage1.
- The home must cost less than $1.5 million3.
- You can take up to 25 years to pay4, or 30 years for first-time buyers and brand-new homes3. Choosing 30 adds 0.20% to the fee.
20% or more down
- No insurance fee.
- Called a conventional mortgage.
- Your lender decides the longest time you can take to pay.
- Needed for homes of $1.5 million or more.
How much the insurance costs
| Down payment | Fee (% of the mortgage) |
|---|---|
| 5% to 9.99% | 4.00% |
| 10% to 14.99% | 3.10% |
| 15% to 19.99% | 2.80% |
| 20% or more | None |
These come from CMHC's table2. Taking more than 25 years adds 0.20%. If your down payment is borrowed or comes from another non-traditional source (CMHC's examples include loans and gifts), the top fee is 4.50%.
Example. A $500,000 home with 10% down: you borrow $450,000. The fee is 3.10%, which is $13,950. So your mortgage is $463,950. The monthly payment calculator adds the fee for you.
The least you can put down
- Homes up to $500,000: 5% of the price.
- Homes from $500,000 to $1.5 million: 5% of the first $500,000, plus 10% of the rest.
- Homes of $1.5 million or more: 20% of the price1.
These rules, and the $1.5 million limit, started on December 15, 20243. Rules can change, so check with your lender.