If you are buying a home with less than 20% down payment, you are required to pay mortgage default insurance (commonly called CMHC insurance). The insurance premium — typically 2.80% to 4.00% of the mortgage — gets added to your mortgage balance. What most buyers do not expect is that several provinces also charge provincial sales tax (PST) on that insurance premium, and that tax must be paid in cash at closing. It cannot be added to the mortgage.
This is one of the most common surprises on the statement of adjustments.
Which Provinces Charge PST on Mortgage Insurance
| Province/Territory | PST on CMHC Premium? | Tax Rate | Tax Name |
|---|---|---|---|
| Ontario | Yes | 8% | RST (Retail Sales Tax) |
| Quebec | Yes | 9% | QST (Quebec Sales Tax) |
| Saskatchewan | Yes | 6% | PST |
| Manitoba | Yes | 7% | RST |
| British Columbia | No | — | — |
| Alberta | No | — | — |
| New Brunswick | No | — | — |
| Nova Scotia | No | — | — |
| Prince Edward Island | No | — | — |
| Newfoundland and Labrador | No | — | — |
| Northwest Territories | No | — | — |
| Nunavut | No | — | — |
| Yukon | No | — | — |
Key point: GST/HST does not apply to mortgage default insurance premiums in any province. Only the provincial sales taxes listed above apply.
CMHC Insurance Premium Rates
Before calculating the PST, you need to know the insurance premium rate. All three insurers (CMHC, Sagen, Canada Guaranty) use the same premium schedule:
| Down Payment | Premium (% of Mortgage) |
|---|---|
| 5% (minimum) | 4.00% |
| 5.01%–9.99% | 3.10% |
| 10%–14.99% | 2.80% |
| 15%–19.99% | 2.40% |
| 20%+ | Not required (conventional mortgage) |
The premium is calculated on the mortgage amount, not the purchase price. For example: $500,000 home with 5% down = $475,000 mortgage × 4.00% = $19,000 premium.
PST Cost by Province and Purchase Price
5% Down Payment (4.00% Premium)
| Purchase Price | Mortgage | CMHC Premium | ON (8%) | QC (9%) | SK (6%) | MB (7%) |
|---|---|---|---|---|---|---|
| $300,000 | $285,000 | $11,400 | $912 | $1,026 | $684 | $798 |
| $400,000 | $380,000 | $15,200 | $1,216 | $1,368 | $912 | $1,064 |
| $500,000 | $475,000 | $19,000 | $1,520 | $1,710 | $1,140 | $1,330 |
| $600,000 | $565,000 | $22,600 | $1,808 | $2,034 | $1,356 | $1,582 |
| $700,000 | $665,000 | $26,600 | $2,128 | $2,394 | $1,596 | $1,862 |
| $800,000 | $755,000 | $30,200 | $2,416 | $2,718 | $1,812 | $2,114 |
| $999,999 | $924,999 | $37,000 | $2,960 | $3,330 | $2,220 | $2,590 |
10% Down Payment (2.80% Premium)
| Purchase Price | Mortgage | CMHC Premium | ON (8%) | QC (9%) | SK (6%) | MB (7%) |
|---|---|---|---|---|---|---|
| $300,000 | $270,000 | $7,560 | $605 | $680 | $454 | $529 |
| $400,000 | $360,000 | $10,080 | $806 | $907 | $605 | $706 |
| $500,000 | $450,000 | $12,600 | $1,008 | $1,134 | $756 | $882 |
| $600,000 | $530,000 | $14,840 | $1,187 | $1,336 | $890 | $1,039 |
| $800,000 | $710,000 | $19,880 | $1,590 | $1,789 | $1,193 | $1,392 |
| $999,999 | $874,999 | $24,500 | $1,960 | $2,205 | $1,470 | $1,715 |
15% Down Payment (2.40% Premium)
| Purchase Price | Mortgage | CMHC Premium | ON (8%) | QC (9%) | SK (6%) | MB (7%) |
|---|---|---|---|---|---|---|
| $300,000 | $255,000 | $6,120 | $490 | $551 | $367 | $428 |
| $400,000 | $340,000 | $8,160 | $653 | $734 | $490 | $571 |
| $500,000 | $425,000 | $10,200 | $816 | $918 | $612 | $714 |
| $600,000 | $505,000 | $12,120 | $970 | $1,091 | $727 | $848 |
| $800,000 | $675,000 | $16,200 | $1,296 | $1,458 | $972 | $1,134 |
| $999,999 | $849,999 | $20,400 | $1,632 | $1,836 | $1,224 | $1,428 |
How PST Appears on Your Statement of Adjustments
The PST shows up as a cash debit on your statement of adjustments:
Ontario example: $600,000 purchase with 5% down
| Line Item | Amount |
|---|---|
| CMHC insurance premium (added to mortgage, not paid in cash) | ($22,600 — financed) |
| RST on CMHC premium (8% × $22,600) — paid in cash | $1,808 |
The $22,600 premium is added to your mortgage balance (your mortgage becomes $587,600 instead of $565,000). The $1,808 PST is paid in cash at closing, separate from your down payment and other closing costs.
How PST Changes Your Closing Cash Requirements
Many first-time buyers budget for the minimum down payment and forget about PST on the insurance premium. Here is the total cash you need at closing (excluding other closing costs):
Ontario Example: $500,000 Home, 5% Down
| Cash Required | Amount |
|---|---|
| Down payment (5%) | $25,000 |
| PST on CMHC premium (8% × $19,000) | $1,520 |
| Ontario land transfer tax | $6,475 |
| First-time buyer LTT rebate | ($4,000) |
| Legal fees + disbursements (estimate) | $2,000 |
| Title insurance | $350 |
| Interest adjustment (estimate) | $400 |
| Total closing cash needed | $31,745 |
Without PST on the CMHC premium, the total would be $30,225. The PST adds $1,520 — roughly 6% more closing cash than expected.
Quebec Example: $500,000 Home, 5% Down
| Cash Required | Amount |
|---|---|
| Down payment (5%) | $25,000 |
| QST on CMHC premium (9% × $19,000) | $1,710 |
| Quebec transfer duties (welcome tax) | $5,500 |
| Notary fees + disbursements | $1,800 |
| Title insurance | $350 |
| Interest adjustment (estimate) | $400 |
| Total closing cash needed | $34,760 |
Quebec buyers pay the highest PST on CMHC insurance ($1,710 on a $19,000 premium) and cannot use a first-time buyer exemption on transfer duties for homes above approximately $270,000.
How to Reduce or Avoid PST on CMHC Insurance
| Strategy | Details | PST Savings |
|---|---|---|
| Put 20% down | Eliminates mortgage insurance requirement entirely | 100% — no premium, no PST |
| Put 10% down instead of 5% | Lower premium rate (2.80% vs 4.00%) = lower PST base | ~30% reduction in PST |
| Put 15% down instead of 10% | Even lower premium rate (2.40%) | ~14% further reduction |
| Buy in a non-PST province | Alberta, BC, and Atlantic provinces do not charge PST | 100% — though home prices vary |
| There is no way to finance the PST | Unlike the premium itself, PST cannot be added to the mortgage | N/A |
Breakeven Analysis: Extra Down Payment to Reduce PST
| Down Payment on $500K Home | Mortgage | Premium | ON PST (8%) | Extra Cash vs 5% Down | PST Saved |
|---|---|---|---|---|---|
| 5% ($25,000) | $475,000 | $19,000 | $1,520 | — | — |
| 10% ($50,000) | $450,000 | $12,600 | $1,008 | $25,000 | $512 |
| 15% ($75,000) | $425,000 | $10,200 | $816 | $50,000 | $704 |
| 20% ($100,000) | $400,000 | $0 | $0 | $75,000 | $1,520 |
The math is clear: Increasing your down payment to reduce PST alone is not a strong financial argument — you would need an extra $25,000 to save $512. The real savings come from the lower (or zero) CMHC premium on the mortgage, the lower mortgage balance, and the reduced interest over the life of the loan.
PST on CMHC Insurance for Rental Properties
If you purchase a rental property with mortgage default insurance (available for 1–4 unit residential properties with less than 20% down), the PST applies in the same provinces at the same rates. However, the CMHC premium on a rental property may also be higher due to lender surcharges for non-owner-occupied properties.
PST on Mortgage Insurance at Renewal or Refinance
| Event | PST Charged Again? |
|---|---|
| Renewal with same lender | No — insurance stays in force |
| Switching lenders at renewal (porting insurance) | No — original insurance transfers |
| Refinancing (new mortgage, higher amount) | If new insurance is required, yes — PST applies again on the new premium |
| Increasing amortization at renewal | No — insurance remains from original funding |
You only pay PST on mortgage default insurance once — at your initial mortgage funding. The exception is if you refinance, break your mortgage, and need new insurance on a new mortgage.
Why These Provinces Charge PST on Insurance
Insurance premiums are subject to provincial sales tax in several provinces as part of their broader taxation of insurance products. Mortgage default insurance is classified as an insurance product, not a financial service — so it does not receive the GST/HST exemption that most financial services enjoy.
| Insurance Type | PST Applicable? |
|---|---|
| Mortgage default insurance (CMHC/Sagen/CG) | Yes — in ON, QC, SK, MB |
| Home/property insurance | Yes — in ON, QC, SK, MB |
| Title insurance | Yes — in ON, QC, SK, MB |
| Life insurance | Exempt in most provinces |
| Auto insurance | Varies by province |
Budget for It: The Complete Closing Day Cash Checklist
| Cash Item | Financed or Cash? | PST-Affected Province Impact |
|---|---|---|
| Down payment | Cash | No impact |
| CMHC/Sagen/CG premium | Added to mortgage (financed) | No impact — but increases mortgage balance |
| PST on CMHC premium | Cash at closing | $500–$3,000+ depending on purchase price |
| Land transfer tax | Cash | No impact (separate calculation) |
| Legal fees | Cash | No impact |
| Title insurance | Cash | No impact |
| Interest adjustment | Cash | No impact |
Bottom line: If you are buying in Ontario, Quebec, Saskatchewan, or Manitoba with less than 20% down, add 6%–9% of your CMHC premium amount to your closing cash budget. On a typical purchase, this is $500–$3,000 extra that you cannot borrow or finance.