CMHC Mortgage Insurance in British Columbia: When Is It Required?

If you are buying a home in British Columbia with less than 20% down, mortgage loan insurance is typically needed, although a lender may require it even with 20% down. It is often called CMHC insurance, after one of the insurers. It can be confusing because you pay for it, yet it is not there to protect you.

This article explains what the insurance is, when it applies, what the minimum down payment looks like, and how the premium works. Rules and lender policies change, so confirm the details for your purchase with your lender.

This article covers the law of British Columbia.

What mortgage loan insurance does

Mortgage loan insurance protects the lender if the borrower cannot make payments. The lender pays the premium, but likely passes the cost on to the borrower.

In practice, it lets a lender say yes to a buyer with a smaller down payment, because the lender is covered if things go wrong. How the insurance affects your own obligations under your mortgage depends on your mortgage terms, so it is worth confirming with a lawyer.

When is it required?

Insurance is typically needed if your down payment is less than 20% of the purchase price. There is an exception: a lender may require insurance even with 20% down, usually if the borrower is self-employed or has a poor credit history.

Mortgage insurance is not available on homes priced at $1.5 million or more, so a buyer at that price needs 20% down and an uninsured mortgage. The insured price cap rose from $1 million to $1.5 million effective December 15, 2024. Some older material still shows the $1 million figure, so for a home between $1 million and $1.5 million, confirm with your lender.

Minimum down payment

• Price of $500,000 or less: 5% of the purchase price.
• Price between $500,000 and $1.5 million: 5% of the first $500,000 plus 10% of the amount above $500,000.
• Price of $1.5 million or more: 20% of the whole price.

For a $1 million home, that works out to $25,000 plus $50,000, or $75,000, but only if the lender and insurer accept it. Normally the minimum down payment must come from your own funds.

What the premium costs and how it is paid

For CMHC homeowner loans, the premium is a percentage of the total loan amount and depends on loan-to-value (LTV), which is the loan compared with the home's value. It is a one-time charge that may be added to the insured loan. You can pay a lump sum or add it to the mortgage and pay over time.

Adding the premium to the mortgage means you borrow and pay interest on it, so the real cost is higher than the premium alone. A lender or mortgage professional can show you the figures for your situation.

Special cases and what to do next

Several rules differ depending on the property and your borrowing. Check these with your lender before you make an offer.

• One- and two-unit homes need 5% of the first $500,000 of lending value plus 10% of the rest, with a maximum 95% loan-to-value; three- to four-unit homes need 10%. The home must be for owner occupancy.
• Rental or investment properties are not eligible for the 5%-down homeowner product, and the small rental loan limit is $1,000,000 rather than $1,500,000. Confirm the equity needed for a rental purchase with the lender or CMHC.
• Some borrowers with a strong credit history buying one- to two-unit homes may use a non-traditional down payment, such as an unsecured personal loan or line of credit, but only at 90.01% to 95% loan-to-value. Normally the minimum down payment must come from your own funds.
• Maximum amortization for insured purchase loans is 25 years, with 30 years available through CMHC Home Start. Since December 15, 2024, 30-year amortizations are available to all first-time home buyers and all buyers of new builds.

• Work out your down payment and confirm where the money comes from.
• Ask your lender whether insurance applies and what the premium would be.
• Ask whether to pay the premium up front or add it to the mortgage.
• Speak with a lawyer if your purchase has unusual features, such as a rental unit or a gifted down payment.

Frequently asked questions