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What will mortgage default insurance cost you — and how much of it has to be cash?
The CMHC, Sagen and Canada Guaranty premium on your down payment: the part that is added to your mortgage, the part that is due in cash on closing day, and the boundary where a hundred dollars is worth thousands.
Used only to work out sales tax on the insurance premium. It does not change the qualifying math.
What the insurer charges
- Loan-to-value
- 90.00%
- Minimum down payment at this price
- $35,000.00
- Premium rate
- 3.10%
- Insurance premium (3.10%)
- $16,740.00
- Total mortgage (premium added)
- $556,740.00
Cash needed on closing day
- Down payment
- $60,000.00
- Sales tax on the premium
- $1,339.20
- Closing-cost resources (1.5% of price)
- $9,000.00
- Total cash
- $70,339.20
The premium itself is added to your mortgage. The tax on it cannot be — it is due in cash.
Insured mortgages require you to show resources for closing costs of at least 1.5% of the price, on top of the down payment.
Legal fees, title insurance and inspection are not included — they vary by firm and by deal.
A percentage of the whole loan, in steps
Mortgage default insurance protects the lender, not you, and you pay for it. It is what makes a down payment under 20% legal at all: below that threshold no lender may write the mortgage without cover, so the premium is a condition of the loan rather than a product you are choosing between.
- The rate steps rather than sliding
- There are three bands — 2.80% up to 85.00% · 3.10% up to 90.00% · 4.00% up to 95.00% — and each is a flat percentage of the entire loan. That is the part worth understanding before you decide how much to put down: a down payment that stops a hundred dollars short of a boundary is not charged a hundred dollars more, it is charged the higher percentage on every dollar of the mortgage. The table below prices exactly that.
- The premium goes on the mortgage. The tax on it does not
- The premium itself is capitalized — added to what you borrow, and paid off with interest over the whole amortization. The provincial sales tax charged on that premium cannot be financed. It is due in cash on closing day, which is the day a buyer who budgeted for a down payment and a lawyer discovers they are short.
- The ceilings, and who sets them
- Insurance stops below $1,500,000.00: at or above that price 20% down is the only way in, whatever your income. The insured amortization is 25 years, extended to 30 for a first-time buyer or a newly built home — a federal rule, not a lender concession you can ask for. The premium schedule itself is the insurers' published pricing rather than law: CMHC, Sagen and Canada Guaranty have historically priced a standard purchase identically, and they are three separate companies that could stop.
- What this does not price
- Four cases each need a fact this page does not ask for, and a wrong answer would be worse than a named omission: a down payment that is borrowed rather than saved, which is charged more above 90%; a self-employed borrower whose income is not third-party validated; portfolio or transactional cover a lender buys on a mortgage at or below 80% loan-to-value, which normally reaches you as a rate rather than a premium; and rental or second-home purchases, which price differently.
Where $100.00 of down payment is worth $4,864.00
A $600,000.00 home in Ontario, over 25 years. The two middle rows are $100.00 apart and a whole band apart — the lower one crosses a loan-to-value boundary, and is charged the higher rate on the entire mortgage rather than on the shortfall.
| Down payment | Loan-to-value | Premium rate | Premium | Cash on closing day |
|---|---|---|---|---|
| $35,000.00 | 94.167% | 4.00% | $22,600.00 | $45,808.00 |
| $59,900.00 | 90.017% | 4.00% | $21,604.00 | $70,628.32 |
| $60,000.00 | 90.00% | 3.10% | $16,740.00 | $70,339.20 |
| $90,000.00 | 85.00% | 2.80% | $14,280.00 | $100,142.40 |
| $120,000.00 | 80.00% | None | None | $120,000.00 |
And the smaller down payment needs more cash, not less. Stopping $100.00 short adds $4,864.00 to the premium — and because the province taxes the premium, $289.12 more is due in cash on closing day as well. Holding the money back costs in both directions at once, which is the opposite of how a down payment is usually described.
The part that cannot go on the mortgage
Three provinces charge sales tax on the insurance premium, and it is payable in cash on closing day rather than financed with the rest. On the $16,740.00 premium in the table above:
| Province | Rate on the premium | Cash due at closing |
|---|---|---|
| Ontario | 8.00% | $1,339.20 |
| Quebec | 9.00% | $1,506.60 |
| Saskatchewan | 6.00% | $1,004.40 |
| Quebecon premiums paid after 31 December 2026 | 9.975% | $1,669.82 |
Every other province and territory charges nothing on the premium.
Two things here are commonly reported wrong. Manitoba is not on this list: it exempted mortgage insurance from retail sales tax in July 2020, and consumer guidance that still names it — including the Financial Consumer Agency of Canada's own page — is out of date. And Quebec's rate is not a number but a schedule: it rises with the closing date, so a January closing costs more than a December one on the same purchase.
How this is worked out
- The premium schedule published by CMHC, Sagen and Canada Guaranty for a standard purchase. This is the insurers' pricing, not law and not an OSFI rule — the three have historically priced identically, and they are separate companies.
- The $1,500,000.00 eligibility ceiling and the 30-year insured amortization for first-time buyers and newly built homes — Department of Finance Canada, effective 15 December 2024.
- Provincial sales tax on the premium, from each province's own tax authority. Quebec's rise to 9.975% for premiums paid after 31 December 2026 is Revenu Québec's, published 9 April 2026; Manitoba's exemption is RST Notice 20-04.
- The 1.5%-of-price closing-cost resource requirement, which is an insurer condition rather than a lender preference.
- Land transfer tax is not added here — it has its own calculator, and the two are not simply additive: the 1.5% test is the insurers' proxy for the whole closing bill, of which the transfer tax is usually the largest part.
Method last reviewed 25 August 2026.
Written by Hermann Gael Nang-SongFounder of LoonieLodge Inc., and author of the Canadian mortgage engine this site runs on.
Educational and informational only — not licensed mortgage, financial, legal or tax advice. Every lender's contract governs its own mortgage, and the figures here are estimates from stated assumptions rather than quotes. Confirm anything you intend to act on with your lender and a licensed professional.
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