What Is CMHC Mortgage Insurance in Alberta?
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·Reviewed by a mortgage professional
Short answer
CMHC insurance protects the lender if you default — not you. It is required on high-ratio mortgages (generally less than 20% down) through federally regulated lenders. The premium is usually added to your mortgage balance, and insured mortgages are typically limited to 25-year amortization.
The plain-English version
Default insurance lets buyers purchase with as little as 5% down while lenders manage their risk. Premiums scale with loan-to-value — smaller down payments mean higher premium rates.
Private insurers (Sagen, Canada Guaranty) serve a similar role to CMHC on many files. Your lender chooses the insurer channel.
Alberta-specific considerations
- Insurance rules are federal — identical in Calgary, Edmonton, and rural Alberta.
- The premium increases your mortgage amount, which increases interest paid over time even though it is not “paid upfront” in cash.
- Some purchase types (e.g. certain investment properties) may not qualify for insurance — down payment minimums can be higher.
Example scenario
On a $475,000 mortgage with 10% down, a typical CMHC premium might be roughly 2–3% of the loan amount — often financed into the mortgage. Use the payment calculator with under-20% down to see insured amortization limits.
Common mistakes to avoid
- Thinking CMHC insurance is optional on high-ratio files — it is required through mainstream insured channels.
- Forgetting the premium when comparing 5% vs. 20% down scenarios.
- Assuming insurance covers your payments if you lose your job — it does not; it covers lender loss on default.