When your down payment is less than 20% of the purchase price, lenders in both Canada and the United States require mortgage insurance to protect themselves against default. In Canada it's called CMHC insurance (after the Canada Mortgage and Housing Corporation); in the US it's called PMI (Private Mortgage Insurance). Both accomplish the same goal but work quite differently.
CMHC Insurance (Canada)
In Canada, mortgage insurance is mandatory for any purchase with a down payment of 5–19.99% on a home priced up to $1.5 million (the insured mortgage cap as of December 2024). It is illegal for federally-regulated lenders to issue a high-ratio mortgage without it.
The insurance premium is a one-time charge added directly to your mortgage balance:
| Down Payment | Premium Rate | Premium on $600k Purchase |
|---|---|---|
| 5.00–9.99% | 4.00% | $22,800 (on $570k insured) |
| 10.00–14.99% | 3.10% | $16,740 (on $540k insured) |
| 15.00–19.99% | 2.80% | $14,280 (on $510k insured) |
PST is charged on the premium at closing in ON, MB, and QC (not added to mortgage — paid in cash). The premium is NOT cancelable — it stays for the life of the mortgage. Source: CMHC.ca.
Two other approved insurers exist: Sagen (formerly Genworth Canada) and Canada Guaranty — their premiums match CMHC rates.
PMI (United States)
PMI is a monthly cost added to your mortgage payment, not a lump sum. Rates vary by lender, credit score, LTV ratio, and loan type:
| LTV | Typical Annual PMI Rate | Monthly on $480k Loan |
|---|---|---|
| 95–97% | 1.05–1.40% | $420–$560 |
| 90–95% | 0.65–0.95% | $260–$380 |
| 85–90% | 0.40–0.65% | $160–$260 |
The key advantage: PMI is cancelable under the Homeowners Protection Act (HPA) of 1998 once your LTV reaches 80%. Your lender must automatically cancel it at 78% LTV based on the original amortization schedule. You can request cancellation earlier if you've reached 80% via payments or appreciation (with a new appraisal). Source: CFPB.
FHA loans use MIP (Mortgage Insurance Premium) instead of PMI — it works similarly but includes an upfront premium (1.75% of loan) plus annual premiums that don't automatically cancel for loans with <10% down.
Key Differences at a Glance
| CMHC (Canada) | PMI (US) | |
|---|---|---|
| Trigger | <20% down, price ≤$1.5M | <20% down (conventional loans) |
| Payment structure | One-time premium added to mortgage | Monthly add-on to payment |
| Cancelable? | No — stays for life of mortgage | Yes — cancels at 80% LTV |
| Who provides it | CMHC, Sagen, Canada Guaranty | Private insurers (Radian, MGIC, Essent, etc.) |
| Max purchase price | $1.5M | No hard cap (loan limits vary by program) |
Calculate Your Costs
Use our CMHC & PMI Calculator to see your exact premium based on purchase price and down payment. You can also see how the premium affects your total mortgage balance and monthly payment.