CMHC mortgage loan insurance and the high-ratio mortgage rules, explained

Our OSFI B-20 explainer covers the qualifying-rate math a federally regulated bank has to run. This page covers a separate, older requirement that decides whether a mortgage needs default insurance in the first place — a legal cap on how much a federally regulated lender can lend against a property without it, not a product a lender offers at its own discretion.

The legal rule: no more than 80% loan-to-value, unless it's insured

The Bank Act, the Trust and Loan Companies Act, the Insurance Companies Act, and the Cooperative Credit Associations Act each cap a federally regulated lender at lending no more than 80% of a residential property's value when the loan is secured by that property — a "high-ratio" mortgage, meaning a down payment under 20%, isn't something a federally regulated lender can simply choose to originate on its own credit judgment. The one way around that cap is a specific statutory exception: if the portion of the loan above 80% loan-to-value is insured against default, the lender can originate it anyway. That insurance requirement is where the Canada Mortgage and Housing Corporation (CMHC) — a federal Crown corporation — and two private-sector competitors, Sagen and Canada Guaranty, come in.

CMHC is one insurer among three, not the only one

CMHC operates under the National Housing Act, with its obligations to lenders carrying a full federal government guarantee. Sagen and Canada Guaranty are private mortgage insurers regulated under the Protection of Residential Mortgage or Hypothecary Insurance Act and its Eligible Mortgage Loan Regulations, and each carries a partial, 90% federal guarantee rather than CMHC's full 100% backing — private insurers separately pay into a guarantee fund to cover the gap. All three price their premiums on schedules reviewed by the federal government, so the underlying legal requirement and dollar mechanics described on this page apply regardless of which of the three actually insures a given loan.

The dollar limits: down payment tiers, and a hard price ceiling

The minimum down payment for an insured mortgage is 5% of the first $500,000 of the purchase price and 10% of any portion above that. Effective December 15, 2024, the federal government raised the purchase-price ceiling for mortgage insurance eligibility from $1 million to $1.5 million — a home priced above $1.5 million cannot be insured at all under this program, regardless of the down payment offered, which functionally requires a 20%-or-greater down payment on any home above that price.

What the insurance actually costs, and who pays it

The insurance premium is charged as a percentage of the mortgage amount (not the purchase price) and is added to the loan itself in most cases, meaning a borrower pays interest on the premium over the life of the loan rather than paying it upfront. The premium rises as the loan-to-value ratio rises — roughly 0.6% of the loan amount at 65% LTV, rising through the mid-single digits at higher ratios, up to about 4.0% at 95% LTV (a 5% down payment), with an additional surcharge for an amortization period beyond 25 years. The exact current schedule should be checked directly against the insurer's own published rate table rather than assumed from a past year's figures, since these schedules are reviewed periodically.

Qualifying limits alongside the insurance requirement

An insured mortgage is also qualified using debt-service ratio ceilings: a Gross Debt Service (GDS) ratio — housing costs (principal, interest, property taxes, heating, and 50% of condo fees where applicable) as a share of gross income — capped at 39%, and a Total Debt Service (TDS) ratio, which adds other debt obligations on top of housing costs, capped at 44%. Standard amortization for an insured mortgage is capped at 25 years, extended to 30 years specifically for first-time homebuyers and buyers of new-construction homes as part of the same December 2024 changes that raised the price ceiling.

What this page is, and isn't: an explanation of a real federal legal requirement and its current dollar figures, for general understanding — not a comparison of CMHC, Sagen, or Canada Guaranty's underwriting flexibility or service quality, and not a lender rate or product comparison of any kind. We do not name, rank, vet, or imply any verdict about a specific Canadian broker, lender, or brokerage on this or any Library page, and our published standard and Register remain United States-only.

What to actually check

If your down payment is under 20%, confirm directly with your lender which of the three insurers is actually insuring the loan, and ask for the exact premium being charged and whether it's being added to your mortgage balance (and therefore financed with interest) or paid upfront. If the home you're buying is priced above $1.5 million, confirm directly that insured financing isn't being assumed as an option, since it categorically isn't past that ceiling.