Ottawa is one of Canada's most active markets for CMHC-insured mortgages, and for good reason. With average home prices around $680,000 and first-time buyers often working with down payments of 5%–15%, mortgage default insurance is a reality for a large portion of Ottawa purchasers. Here's what you need to understand before you close.
What Is CMHC Mortgage Insurance?
Canada Mortgage and Housing Corporation (CMHC) provides mortgage default insurance on high-ratio mortgages, loans where the buyer's down payment is less than 20% of the purchase price. This insurance protects the lender (not the borrower) if you default on your mortgage.
It's mandatory for all home purchases in Canada with less than 20% down on homes priced under $1.5 million.
How Much Does CMHC Insurance Cost?
The premium is calculated as a percentage of the insured loan amount:
| Down Payment | Premium Rate | |---|---| | 5%–9.99% | 4.00% | | 10%–14.99% | 3.10% | | 15%–19.99% | 2.80% |
Ottawa example: Buying a $650,000 home with 10% down ($65,000):
- Insured loan: $585,000
- CMHC premium: $585,000 × 3.10% = $18,135
- This is added to your mortgage, making the total $603,135
The premium is also subject to Ontario PST (8%), payable at closing: approximately $1,451 on the above example.
Who Provides Mortgage Insurance?
Three providers are approved in Canada: CMHC (federal crown corporation), Sagen (formerly Genworth Canada), and Canada Guaranty. Your lender chooses which insurer to use, all three charge identical premiums and offer equivalent coverage.
Is CMHC Insurance Worth It?
From the buyer's perspective, CMHC insurance isn't something you choose. It's mandatory with less than 20% down. But here's the often-overlooked benefit: insured mortgages typically carry lower interest rates than uninsured mortgages because lenders face zero default risk.
In 2026, the rate spread between insured and uninsured 5-year fixed mortgages is approximately 15–25 basis points. On a $600,000 mortgage, that's $900–$1,500 in annual interest savings, which partially offsets the insurance premium over time.
Ottawa Price Points and CMHC Eligibility
CMHC insurance is available on homes priced up to $1.5 million (the cap was raised from $1 million in December 2024). This change significantly expanded options for Ottawa buyers looking at premium neighbourhoods like Rockcliffe Park, Westboro, or Manor Park.
For Ottawa buyers with exactly 20% saved: running the math on whether to go insured (lower rate, smaller down payment, keep cash for renos) versus uninsured (no premium, higher rate) is worth doing with a mortgage broker.
CMHC Insurance and Rentals
CMHC insured mortgages can be used on owner-occupied duplexes (where you live in one unit and rent the other), making it accessible for Ottawa buyers pursuing the increasingly popular house-hacking strategy. Pure investment properties are not eligible for CMHC insurance.
Understanding CMHC insurance demystifies a cost that surprises many first-time Ottawa buyers. Build it into your calculations from the start and it becomes just another line item in your homeownership budget.
