Several fees may be required when you take out a mortgage. For example, mortgage loan insurance — sometimes referred to as CMHC insurance — is required if you make a down payment of less than 20%.
While CMHC fees are paid upfront, many people wonder if the premiums still apply when it comes time to renew their home loan. The answer is surprisingly straightforward.
Key Points
- You usually don’t have to pay CMHC fees again when you renew your mortgage with your current lender.
- If you switch lenders when you renew, you won’t have to pay CMHC fees again unless your amortization and loan amount increase.
- CMHC premiums can cost up to 4.00% on traditional mortgages, depending on your loan-to-value (LTV) ratio.
- You can avoid paying CMHC fees by making a 20% down payment or selling your house and using the CMHC’s portability feature.
What Is CMHC Insurance?
CMHC insurance is required if you can’t come up with a down payment that is at least 20% of the purchase price of the home. These high-ratio mortgages require mortgage premiums to be paid to protect the lender, even though you pay the premiums.
CMHC mortgage insurance might sound like a bother to have to pay, but it’s necessary to protect lenders in case you default on your mortgage. Without this insurance, homeowners may not qualify for a mortgage, so it actually protects consumers who want to buy a home.
The CMHC – or Canada Mortgage and Housing Corporation – is one of three entities that issues mortgage default insurance in Canada. The other two include Sagen (previously known as Genworth Financial Canada) and Canada Guaranty. However, Sagen and Canada Guaranty are private insurance providers, while CMHC is a federal corporation.
How Much Do CMHC Premiums Cost?
The CMHC fees that you would have to pay are based on your down payment amount. Generally speaking, the higher the down payment amount, the lower the fees.
Here are the current CMHC fees that are required based on various loan-to-value ratios:
- Up to and including 80%: 2.40%
- Up to and including 85%: 2.80%
- Up to and including 90%: 3.10%
- Up to and including 95%: 4.00% on a traditional down payment; 4.50% on a non-traditional down payment
Do I Have to Pay CMHC Fees If I Renew My Mortgage?
When you renew your mortgage, you generally don’t have to pay CMHC fees again if you stay with your current lender. The entire insurance premium was already calculated upfront and added to your mortgage when you first took it out. The insurance is paid through your mortgage payments (unless you paid it in full upfront) over the same amortization period as your home loan.
However, you may have to pay a new premium when you switch lenders at the time of renewal if:
- Your loan amount has increased, or
- You extended your amortization period (the time within which you have to fully repay your mortgage)
If you decide to switch lenders when you renew your mortgage, the mortgage default insurance can be transferred. You may be able to get a lower interest rate in exchange for having your mortgage insured because of the lower risk on the party of the lender. This is one of the perks of CMHC insurance.
Are CMHC Fees Transferred When Switching Lenders At Renewal?
Yes, your mortgage default insurance can be transferred if you switch lenders when you renew your mortgage. You can get a lower interest rate in exchange for having your mortgage insured because of the lower risk on the party of the lender. This is one of the perks of CMHC insurance, even though premiums must be paid.
However, switching lenders when you renew will subject you to the mortgage stress test again. While you can avoid this stress test if you renew with your current lender, switching lenders will trigger another mortgage stress test.
How Can I Avoid Paying CMHC Fees?
The following are ways to avoid CMHC fees:
Put At Least 20% Down
The most obvious way to avoid paying CMHC fees is to make a down payment of at least 20% when you buy a home. This way, no mortgage insurance is required, as the loan is considered less risky to the lender.
Take Advantage Of CMHC’s Portability Option When You Sell
There may also be a way to reduce or avoid CMHC fees if you move to another home and take advantage of what’s known as a portability option.
To use this portability feature, the following requirements must be met:
- The amortization period of your new mortgage can’t exceed the amortization period remaining from your original home loan (up to 25 years)
- The new loan-to-value (LTV) ratio must not exceed your current LTV on your existing home
- The new mortgage amount can’t exceed the current outstanding loan balance
You’ll save money thanks to the premium discount provided through the CMHC’s portability feature. The discount amount is based on how much time has elapsed between the closing date of the original mortgage and that of the new insurance application, as follows:
| Time Between Original Closing Date To New Insurance Application | Premium Discount |
| Within 6 months | 100% |
| Within 12 months | 50% |
| Within 24 months | 25% |
For example, if the amount of time elapsed from your original closing date and your new insurance application is 6 months, you would get a 100% premium discount on the premiums already paid for your original CMHC-insured mortgage.
Apply For A Mortgage From A Lender That Doesn’t Require Mortgage Default Insurance
Some lenders do not require CMHC insurance since they’re not federally regulated. This includes private lenders, B lenders, and some credit unions. These lenders may be willing to assume more risk than traditional lenders without the need for mortgage insurance.
How Can I Avoid Paying CMHC Fees Twice?
Since CMHC fees are added to your mortgage from the get-go, this mortgage default insurance premium covers the entire length of the mortgage from the time of mortgage initiation. As such, you do not have to pay again every time you renew your mortgage.
That said, it’s a good idea to inform your new lender that your current mortgage already has default insurance. Request a certificate number for your current insurance policy from your current lender to show your new lender. If necessary, a lawyer may need to be involved to sign the registration documents that come with your mortgage contract.
Can I Get A Refund On My CMHC Insurance Fees?
CMHC fees are not generally refundable. However, the CMHC offers the CMHC Eco Plus program to those who buy an energy-efficient home or make energy-efficient upgrades to their homes.
Under this program, you may qualify for up to a 25% refund of your CMHC premium. You have two years after closing your mortgage to submit a request for this refund. You may also be asked to provide supporting documentation to the CMHC to back your request.
Final Thoughts
Unless you plan to pay off your mortgage in full, you’ll need to renew it when the term comes due. At that time, you’ll have a choice to either remain with your current lender or switch to a new one. If you choose the latter, ensure you’re not charged twice for mortgage default insurance. A new premium may be required if you switch lenders at renewal and increase your amortization period and loan amount.
CMHC Insurance FAQs
How long do I have to pay CMHC insurance premiums?
Can I get rid of CMHC insurance in the middle of my mortgage term?
How do I pay CMHC premiums?
Do I have to pay tax on CMHC premiums?
Note: Loans Canada does not arrange, underwrite or broker mortgages. We are a simple referral service.
