# How does mortgage insurance work, and is it required?

> Mortgage insurance protects lenders against borrower default and is mandatory in Canada if your down payment is less than 20%.

Category: Purchasing
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/purchasing/how-does-mortgage-insurance-work-and-is-it-required

## Answer
| Feature          | CMHC Mortgage Insurance  | Private Mortgage Insurance |
|-------------------|---------------------------|----------------------------|
| Coverage         | Up to 95% LTV, but only for properties up to $1,500,000; above that, minimum 20% down payment required (uninsurable) | Varies by provider         |
| Government Backed| Yes                       | No                         |
| Premium Rates     | Standardized by CMHC, Sagen, and Canada Guaranty with specific rates: 2.80% (80.01%-85%), 3.10% (85.01%-90%), 4.00% (90.01%-95%) | Vary by provider          |

## Institutional highlights
- Mortgage insurance protects your lender if you can't make your payments.
- It doesn't replace the need for the lender to check your credit and ability to repay your mortgage.
- Your lender can get mortgage insurance from the government or private companies.
- Lenders need to make sure the mortgage insurance company is financially stable and pays claims.
- Your lender must follow the mortgage insurer's rules to keep the insurance valid.

## Related guide
- https://ratellow.com/guides/land-transfer-tax-explained

## Sources
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- 4.1.10 Real estate exposures — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- Page 2 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=2