In Canada, the Government requires Lenders to take out “Mortgage Loan Insurance” when a Buyer purchases a home with a down payment of less than 20% of the price. This protects the Lenders if a Buyer defaults, and enables Buyers to purchase homes with as little as 5% down with interest rates comparable to Buyers with higher down payments.
Lenders pay the Canadian Mortgage and Housing Corporation Loan Insurance and then pass the premium onto you. The amount changes based on the purchase price and your down payment amount.
Typically, Lenders will tack on this “CMHC Fee” to your total mortgage amount (but make sure with your Lender that they will, that is not guaranteed), so usually you don’t need to pay this amount up front. However, you will be required to pay the HST on the “CMHC Fee” on closing.