PST on Mortgage Insurance in Ontario: How Much It Costs and When You Pay It

If you buy a home in Ontario with less than 20% down, the PST on mortgage insurance is 8% of your mortgage default insurance premium. You pay it in one lump sum, in cash, on closing day. Unlike the premium itself, it cannot be added to your mortgage.

On a $600,000 home with the minimum down payment, that tax works out to $1,808. It is easy to overlook until your lawyer sends the final closing figures. Before you make an offer, you can estimate your CMHC premium with our calculator, then multiply the result by 8% to see the PST you will need to set aside.

This guide explains what the tax is, how to work it out, which provinces charge it and how to plan for it.
 

What Is PST on Mortgage Insurance?

Mortgage default insurance protects your lender if you stop making payments. In Canada, you usually need it when you put down less than 20% of the home's price. A mortgage with less than 20% down is often called a high-ratio mortgage.

The insurance comes from one of three insurers: CMHC, Sagen or Canada Guaranty. Your lender arranges it on your behalf, but you pay the premium.

Ontario charges Retail Sales Tax (RST) at 8% on premiums paid under taxable insurance contracts. CMHC confirms that premiums in Ontario are subject to provincial sales tax. This charge is often called "PST on CMHC insurance", even when the insurer is Sagen or Canada Guaranty.
 

How Much Is PST on Mortgage Insurance in Ontario?

The rate is a flat 8% of the premium. The premium depends on your loan-to-value ratio (LTV), which is your mortgage amount divided by the purchase price.

Here are CMHC's premium rates for owner-occupied homes, as of October 2026:

Sagen and Canada Guaranty set their own premiums, so your lender will confirm the exact figure. The 8% tax applies the same way to whatever premium is charged.
 

How to Calculate PST on CMHC Insurance

You can work it out in three steps:

1. Mortgage amount: Subtract your down payment from the purchase price.
2. Premium: Multiply the mortgage amount by the premium rate for your LTV band.
3. PST: Multiply the premium by 8%.

Worked Example: A $600,000 Home in Ontario

Under federal rules, the minimum down payment is 5% of the first $500,000 plus 10% of the portion above $500,000. On a $600,000 home, that is $25,000 plus $10,000, so $35,000.

Notice the last column. The premium can be rolled into your mortgage, but the PST stays outside it. On the minimum down payment, you still need $1,808 in cash on top of your down payment.

When Do You Pay PST on Mortgage Insurance?

You pay it on closing day, as part of your closing costs. CMHC and the Financial Consumer Agency of Canada (FCAC) both state that you cannot add the provincial sales tax to your mortgage.

In practice, that means it is paid from your own funds along with your other closing costs. Your lender will confirm the premium, and your lawyer will tell you the full amount of funds to bring before closing. Ask for both figures early so nothing surprises you in the last week.

Can PST on CMHC Be Added to Your Mortgage?

No. CMHC's rule is clear, and it applies with every lender. The premium can be financed, but the tax on it cannot.

That rule matters if you are stretching to reach the minimum down payment. Your savings have to cover the down payment, the PST and every other closing cost. If your lender asks for proof of funds for closing costs, the PST should be part of that number.

PST Alongside Your Other Ontario Closing Costs

PST on mortgage insurance is one of several costs Ontario buyers pay in cash at closing. It is often smaller than land transfer tax, but it is easy to miss because it only applies to insured mortgages.

Common closing costs to budget for:

• Land transfer tax: Ontario charges it on most purchases, and Toronto adds its own municipal tax. You can check your amount with our land transfer tax calculator.
• PST on mortgage insurance: 8% of your premium, if your down payment is under 20%.
• Legal fees and disbursements: Your lawyer quotes these up front.
• Title insurance: Usually arranged by your lawyer.
• Home inspection and appraisal: These may be due before closing.
• Property tax and utility adjustments: These depend on what the seller has already prepaid.

A licensed Ontario mortgage brokerage can help you estimate these costs before you commit to a purchase price.

Which Provinces Charge PST on Mortgage Default Insurance?

As of October 2026, only three provinces tax mortgage default insurance premiums. CMHC lists them as Ontario, Quebec and Saskatchewan. Manitoba used to charge its RST on these premiums, but it exempted contracts that took effect after June 30, 2020, so you may still see it in older guides.

Quebec's change is worth knowing if you are comparing markets. Revenu Québec has announced that its tax on insurance premiums will move from 9% to 9.975%, matching the QST, for premiums paid after December 31, 2026.

Does PST Apply If You Put 20% Down?

Usually not. With 20% or more down, you have a conventional mortgage and default insurance is normally not required. No premium means no PST.

There are exceptions. The FCAC notes that some lenders still require insurance with 20% down, often for self-employed borrowers or buyers with weaker credit. If your lender insures a conventional mortgage, the tax rules are the same, so ask who pays the premium before you sign.

Also note the price limit. Since December 15, 2024, insured mortgages are available on homes priced under $1.5 million. At $1.5 million or more, you need at least 20% down, so this tax will not apply to a standard purchase.

How to Reduce PST on Your Mortgage Insurance

You cannot change the 8% rate, but you can shrink the premium it is charged on. Here are practical ways to do that:

• Move up an LTV band: Going from the minimum down payment to 10% drops the CMHC rate from 4.00% to 3.10%. On a $600,000 home, the premium falls by $5,860 and the PST falls from $1,808 to $1,339.20.
• Use a traditional down payment: Borrowed down payments can carry a higher premium rate (4.50% with CMHC instead of 4.00%), which raises the PST too.
• Ask about energy-efficient home refunds: CMHC says a premium refund of up to 25% may be available when insurance finances an energy-efficient home. Check how any refund is handled before you rely on it.
• Think about amortization: First-time buyers and buyers of new builds may be eligible for 30-year amortizations on insured mortgages. CMHC lists a 0.20% premium surcharge for amortizations beyond 25 years, which also raises the PST, so ask your broker to compare both options.

If you qualify as a first-time buyer, our first-time buyer mortgage team can walk you through these choices as they build your mortgage plan.

Is PST Charged Again on Renewal, Switch or Porting?

PST is tied to a premium. If no new premium is charged, no new PST is charged either.

When you renew with the same insured mortgage, you are not buying new insurance. If you switch an insured mortgage to a new lender at renewal without borrowing more, ask the new lender to confirm in writing that no new premium applies. The picture changes if you port your mortgage to a new home and borrow more. CMHC charges a top-up premium based on the increase to the loan amount (or on the total loan less any premium credits, if that works out lower), and in Ontario that new premium is subject to the same 8% tax.

Frequently Asked Questions

Is PST on mortgage insurance the same as HST?

No. Ontario's HST does not apply to insurance premiums. The 8% charge is Retail Sales Tax, which Ontario still applies to taxable insurance premiums.

Who pays PST on CMHC insurance, the buyer or the lender?

The buyer pays it. Your lender arranges the insurance, but the premium and the tax on it are passed on to you.

Does PST apply to Sagen and Canada Guaranty premiums?

Yes. Ontario's RST applies to taxable insurance premiums in general, so it applies whichever of the three insurers your lender uses.

Does the LendingHub CMHC calculator include the PST?

No. The calculator shows your premium, your total mortgage with insurance and your payments. Take the premium it gives you and multiply it by 8% to get the Ontario PST.

What is the PST on a $20,000 CMHC premium?

It is $1,600. Multiply any premium by 0.08 to get the Ontario PST.
 

Plan for the PST Before You Make an Offer

PST on mortgage insurance in Ontario is predictable: 8% of your premium, paid in cash at closing, never added to the mortgage. The earlier you know the number, the easier it is to plan your down payment and closing budget.

Run your numbers on the LendingHub CMHC calculator, multiply the premium by 8%, and add it to your closing costs. If you want a second look, a LendingHub mortgage agent can go over your down payment options with you before you buy.

This article is general information only. Please speak with a licensed mortgage or tax professional about your own situation.