For example, if you put 5% down on a $300,000 home, your CMHC fees would be as follows:
Purchase price: $300,000 –$15,000 (5% down payment) = Mortgage requirement of $285,000
$285,000 mortgage X 3.6% Mortgage default premium = $10,260 plus 8% PST ($820.80) = $11,080.80.
You are charged PST on your mortgage default insurance, but the good news is that only the PST portion has to be paid out-of-pocket by you on the closing date. The remainder, in this example the $11,080.80 is added to your mortgage.
In short, mortgage default insurance is an additional cost you need to consider when purchasing a home with less than 20% down, but the benefit is that it allows you to purchase a home for as little as 5% down
