CMHC mortgage loan insurance is required by Canadian law for any home purchase with a down payment of less than 20% — it protects the lender against default, and the premium is paid by the buyer, added directly to the mortgage. Flowers Team Real Estate explains CMHC insurance to every buyer so there are no surprises at closing.

Here is how CMHC mortgage insurance works:

• Who it covers — CMHC insurance protects the lender if the borrower defaults. It does not protect the homeowner.
• When it is required — any purchase with less than 20% down at a federally regulated lender requires mortgage insurance through CMHC, Sagen, or Canada Guaranty.
• Premium rates — 4.0% of the mortgage for 5% down, 3.1% for 10% down, 2.8% for 15% down. Added to your mortgage principal, not paid upfront. Use the CMHC Premium Calculator to estimate your exact cost.
• Maximum insured purchase price — as of late 2024, CMHC insurance eligibility was extended to properties up to $1,500,000 (previously capped at $1,000,000). Confirm current limits with your mortgage broker as these rules may change.
• PST on the premium — in Ontario, provincial sales tax (8%) applies to the CMHC premium and must be paid in cash at closing — it cannot be rolled into the mortgage.
• Rolling the premium into your mortgage — most buyers choose to add the CMHC premium to their mortgage rather than paying it upfront. This does not typically reduce the mortgage amount you qualify for, as it is added on top of your maximum qualified amount.

While CMHC insurance adds cost, it enables buyers to enter the market with as little as 5% down. For first-time buyers in Milton's market, this can be the difference between owning and continuing to rent. Flowers Team Real Estate and our mortgage partners will calculate the exact CMHC impact on your monthly payments. Contact us to get started.