Glossary
Canada Mortgage and Housing Corporation (CMHC)
CMHC is the federal Crown corporation that insures Canadian mortgages against borrower default and publishes national housing data and research..
Canada Mortgage and Housing Corporation (CMHC) is the federal Crown corporation that provides mortgage default insurance to Canadian lenders and publishes national housing data and research. It operates at arm's length from the federal government and reports through the federal housing minister.
What CMHC does
CMHC's best-known function is mortgage loan insurance, also called mortgage default insurance. When a buyer's down payment falls below the federal minimum for an uninsured loan — typically under 20% of the purchase price — the lender generally requires that the mortgage be insured. That insurance protects the lender if the borrower defaults; it does not protect the borrower. Premiums are set by the insurer and are typically added to the mortgage balance.
CMHC competes with two private insurers, Sagen and Canada Guaranty. Lenders choose which insurer to use, but eligibility rules — including maximum amortization and borrower qualification standards — are set federally and apply to all three insurers.
Beyond insurance
CMHC also collects and publishes housing data: housing starts, rental market reports, mortgage arrears and affordability indicators used by lenders, economists and policymakers. It administers certain federal housing programs and produces research on how the Canadian housing system is financed.
Why it matters to a borrower
An insured mortgage carries a premium that increases the loan amount and therefore the payments. Because federal rules apply to insured loans, the mortgage must meet the mortgage stress test minimum qualifying rate, and the borrower must fit within the GDS and TDS ratio limits.
- Uninsured mortgages, with 20% or more down, are still stress tested but carry no default insurance premium.
- Insured borrowers may have less flexibility when switching lenders, though insurance portability is generally available.
- Premium costs can be estimated with a CMHC insurance calculator.
Insured-mortgage rules are adjusted from time to time. Confirm the current eligibility criteria and premium structure with your lender or on the CMHC website before relying on any estimate.
Frequently asked questions
What does CMHC actually do?
CMHC insures mortgage loans against borrower default so lenders can offer financing to buyers with smaller down payments. It also collects and publishes Canadian housing data, administers certain federal housing programs, and conducts housing research. It is not a bank and does not usually lend money directly to homebuyers.
Is CMHC mortgage insurance mandatory?
Insurance is required by federal rules when the down payment is below the minimum threshold for an uninsured loan, typically under 20% of the purchase price. The lender arranges it. You may be insured by CMHC or by a private insurer such as Sagen or Canada Guaranty, depending on which the lender uses.
Does CMHC insurance protect the borrower?
No. Mortgage default insurance protects the lender if the borrower stops paying. The borrower pays the premium, usually added to the mortgage balance, and remains fully responsible for the debt. CMHC does not cover your payments if you lose income or fall into financial difficulty.
Sources
Related terms
- Mortgage Default Insurance — Insurance that protects the lender, not the borrower, when a high-ratio mortgage goes into default and the home sale does not repay the debt.
- High-Ratio Mortgage — A high-ratio mortgage exceeds 80% of a property's value or purchase price, meaning the down payment is under 20%, and it must be insured against default.
- Mortgage Stress Test — The federal mortgage stress test is a qualification rule that makes lenders check whether you could afford your mortgage if rates were higher than your contract rate.
- Loan-to-Value Ratio (LTV) — The loan-to-value ratio (LTV) is the size of your mortgage expressed as a percentage of the property's appraised value or purchase price.
- Sagen — Sagen is a private Canadian mortgage default insurance provider, formerly known as Genworth Canada, that insures high-ratio mortgages alongside CMHC and Canada Guaranty.