How Much Does Mortgage Default Insurance Cost in British Columbia?

If you are buying a home in British Columbia with less than 20% down, mortgage default insurance usually becomes part of your costs. It is a one-time premium, and the amount depends mostly on how much of the purchase you are borrowing.

This article focuses on what the premium costs and what limits affect it, not on whether you need it. Rates and eligibility can change, so treat this as a guide and confirm the numbers with your lender.

This article covers the law of British Columbia.

Who actually pays the premium

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.

You can usually pay the premium as a lump sum, or add it to the mortgage and pay it over time. CMHC describes the premium as a one-time charge that may be added to the insured loan. Adding it to the mortgage means you borrow more and pay interest on it, so it affects your total cost.

CMHC premium rates by loan-to-value

For CMHC homeowner loans, the premium is a percentage of the total loan amount. The percentage depends on the loan-to-value ratio, which compares your loan to the home's value.

A non-traditional down payment is something like an unsecured personal loan or line of credit. CMHC allows it only for some 1 to 2 unit borrowers with a strong credit history, at 90.01% to 95% loan-to-value. Normally the minimum down payment must come from your own funds.

How a bigger down payment lowers the rate

The rate drops as your down payment grows, because a smaller loan-to-value ratio moves you into a lower tier. A loan in the 90.01% to 95% tier carries 4.00%, while a loan in the 85.01% to 90% tier carries 3.10%.

Moving further down, the 80.01% to 85% tier is 2.80% and the 75.01% to 80% tier is 2.40%. Insurance is typically needed if the down payment is less than 20% of the purchase price. Even small increases in your down payment can move you into a cheaper tier, so ask your lender where the tier lines fall for your purchase.

Limits that affect cost and eligibility

• Price cap: the insured mortgage price cap rose from $1 million to $1.5 million effective December 15, 2024. Mortgage insurance is not available on homes priced at $1.5 million or more, so those buyers need 20% down and an uninsured mortgage.
• Older wording: FCAC's down-payment page still shows the older $1 million figure, so for a home between $1 million and $1.5 million, check with your lender.
• Minimum down payment: 5% of the first $500,000 plus 10% of the amount above $500,000 for prices between $500,000 and $1.5 million. At $1.5 million or more the minimum is 20% of the whole price.
• Unit count: 1 to 2 unit homes need 5% of the first $500,000 of lending value plus 10% of the remainder, while 3 to 4 unit homes need 10%.
• Owner-occupancy: the home must be intended for homeowner occupancy. Rental or investment properties are not eligible for CMHC's 5%-down homeowner product.
• Lender requirements: a lender may require insurance even with 20% down, usually if you are self-employed or have a poor credit history.

Amortization and what to do next

The maximum amortization for insured purchase loans is 25 years. Since December 15, 2024, 30-year amortizations are available to all first-time home buyers and all buyers of new builds. A longer amortization lowers payments but, because you pay interest for longer, usually raises the total interest cost.

• Ask your lender which loan-to-value tier your planned down payment falls into.
• Ask whether the premium would be paid up front or added to the mortgage.
• Confirm the insured price cap that applies to your purchase price.
• Tell the lender if the home is a 3 to 4 unit property or if you plan to rent it out.
• Raise any self-employment or credit issues early, since they can affect insurance requirements.
• Ask a lawyer or accountant if your situation is unusual.

Frequently asked questions