CMHC mortgage default insurance (also called mortgage loan insurance) is required in Canada when your down payment is less than 20% of the purchase price. The insurance protects the lender in case of default.
The insurance premium is calculated as a percentage of your mortgage amount. The percentage varies based on your Loan-to-Value (LTV) ratio — the lower your down payment, the higher the premium rate.
The premium is typically added to your mortgage principal and amortized over the life of the loan, so you don't pay it upfront. However, this increases your total mortgage amount and monthly payments.