Canada Mortgage and Housing Corporation Insurance

Mortgage default insurance, commonly referred to as CMHC insurance, protects the lender in the case the borrower defaults on the mortgage. Mortgage default insurance is required on all mortgages with down payments of less than 20%. Mortgage default insurance is calculated as a percentage of your purchase price applied to your mortgage amount.

This percentage depends on your down payment amount, with the premium being smaller for larger down payments. 

Your mortgage lender will obtain CMHC insurance and will pay for it on the closing date, with the lender passing the cost of the insurance premiums onto you.

You can choose to either pay the entire amount of your CMHC premium up-front, or pay it off gradually through your mortgage payments by adding the premium to your mortgage principal balance. Adding the cost of CMHC insurance to your mortgage balance will mean that your monthly mortgage payments will be higher.