Ontario · updated August 2026
What mortgage default insurance actually costs in Ontario
If you put less than 20% down, you pay a one-time insurance premium of 2.80% to 4.00% of your mortgage, plus 0.20 percentage points more if your amortization runs past 25 years. The premium gets added to your loan, so it costs you nothing on closing day. The 8% Ontario sales tax on it does not get added, and that is real cash. On a $650,000 purchase with the minimum down payment, the premium is $25,620 and the Ontario tax on it is about $2,050 in cash.
What the insurance is, and who it protects
Mortgage default insurance covers the lender if a borrower stops paying and the sale of the home does not repay the loan. Read that again: you pay the premium, the lender is the one insured.If you default, the insurer pays the lender and then pursues you for the shortfall. It is not protection for the buyer, and it is not the same thing as title insurance or mortgage life insurance.
A mortgage with this insurance on it is called an insured mortgage. Insurance is mandatory whenever you put less than 20% down, and it is only available on purchases under $1,500,000. CMHC is the federal Crown corporation most people name, and there are private insurers as well; your lender picks which one, and you rarely deal with them directly.
The trade-off is real rather than one-sided. Because the insurance takes the risk off the lender, insured mortgages often carry the sharpest rates a lender offers. So 20% down does not automatically mean the cheapest borrowing. Ask a broker to price both ways for your actual file, and use thecalculator to see the premium either choice would cost you.
The premium tiers, in dollars
The premium is a percentage of the mortgage amount, not of the purchase price, and the percentage depends on how much you put down:
- 5% to 9.99% down: 4.00% of the loan
- 10% to 14.99% down: 3.10%
- 15% to 19.99% down: 2.80%
- 20% or more down: no premium, no insurance
Here is what that means on a $650,000 home at a 25-year amortization (amortization being the total number of years scheduled to pay the mortgage off). Note the first row: the minimum down payment on $650,000 is $40,000, or 6.15%, not 5%, because the national rule is 5% of the first $500,000 plus 10% of the rest. The plain 5% only applies at or under $500,000.
| Down payment | Loan before premium | Rate | Premium added to loan | 8% Ontario tax, in cash |
|---|---|---|---|---|
| $40,000 (6.15%, the minimum) | $610,000 | 4.00% | $24,400 | $1,952 |
| $65,000 (10%) | $585,000 | 3.10% | $18,135 | $1,451 |
| $97,500 (15%) | $552,500 | 2.80% | $15,470 | $1,238 |
| $130,000 (20%) | $520,000 | none | $0 | $0 |
The cliff effect at 10%, 15% and 20%
Because the tiers are steps rather than a smooth slope, the value of an extra dollar of down payment is wildly uneven. Inside a band, nothing changes; at the edge of a band, a trivial amount of money moves thousands.
Inside the 5% to 9.99% band, extra cash barely helps
Everything from 5% to 9.99% down sits at one flat 4.00%. Adding $1,000 to your down payment inside that band shrinks the premium by about $40 and the Ontario tax on it by about $3. The extra dollars still cut your loan and the interest you pay on it, so they are not wasted, but they buy you no discount on the insurance. This is why putting the bare minimum down and keeping the rest as a cash cushion is often the sensible call if you cannot realistically reach a full 10%.
The 10% edge is the sharpest cliff in the system
On a $650,000 home, 9.99% down is $64,935 and the premium is $23,403 at 4.00%. Put down $65,000, a mere $65 more, and the rate drops to 3.10% for a premium of $18,135. That last $65 saves about $5,268 of premium and about $421 of closing-day cash tax. If you are anywhere near 10%, find the last few dollars.
15% and 20% are worth much less per dollar, except the last one
Going from 10% to 15% on our example means finding another $32,500 in cash to save $2,665 of premium and about $213 of tax. That is a poor return on the cash unless you have it spare. Going from 15% to 20% means another $32,500 to erase the entire $15,470 premium and $1,238 of closing-day cash. That last step is the one that genuinely pays, and it is the only one that removes the insurance entirely.
The 0.20 point surcharge for amortizations over 25 years
Since 15 December 2024, first-time buyers can take a 30-year amortization on an insured mortgage, including on resale homes, not just new builds. A longer amortization lowers the monthly payment by spreading the loan over more years. It costs you twice: far more total interest, and a higher insurance premium.
Any insured amortization beyond 25 years adds 0.20 percentage points to the premium rate. The arithmetic on our $650,000 example with $40,000 down and a $610,000 loan:
- 25-year amortization: 4.00% of $610,000 = $24,400 premium, plus $1,952 of Ontario tax in cash.
- 30-year amortization: 4.20% of $610,000 = $25,620 premium, plus about $2,050 of Ontario tax in cash.
- Difference: $1,220 more added to the mortgage, and $97.60 more cash needed on closing day.
The surcharge applies to every tier, so at 10% down the rate becomes 3.30% and at 15% it becomes 3.00%. With the 30-year premium financed, the total mortgage in the example is $635,620 rather than $610,000, and you pay interest on that premium for as long as you carry the loan.
Ontario RST: the premium is financed, the tax is not
This is the single most misunderstood line in an Ontario purchase. Ontario levies 8% retail sales tax on the insurance premium, and unlike the premium itself, the tax cannot be rolled into the mortgage. Your lawyer collects it as part of your cash to close, along with the land transfer tax. Some provinces do not charge this at all, so national calculators and advice from friends outside Ontario will quietly miss it.
Practically: a buyer with the minimum down on a $650,000 GTA home needs about $2,050 of cash purely for the tax on an insurance policy that protects the lender. It is not optional and it cannot be financed. See thecash to close guidefor how it fits alongside the land transfer tax, legal fees and adjustments.
When paying more down actually saves money
Pulling it together, in order of how much each dollar of extra down payment does for you:
- Reaching exactly 10%, or 15%, or 20%. Crossing a band edge is where the money is. A few dollars can save thousands. Check the edge before you finalise your down payment.
- Reaching 20%. The only level that removes the premium and its tax completely, and the only one that frees you from the $1.5M price ceiling.
- Anywhere in the middle of a band. Worth about 4 cents of premium per dollar in the lowest band, plus the interest saved on a smaller loan. Weigh that against keeping cash for closing costs, moving, and the first year of repairs.
One thing more down payment does not fix is qualifying. That is decided by thestress test and your GDS and TDS ratios, where lenders test you at the greater of your rate plus two percentage points or 5.25%, and where credit card balances count at 3% a month even at a 0% promotional rate. These figures are a planning estimate rather than financial advice: a licensed mortgage broker confirms your actual premium and approval.