Mortgage default insurance protects the lender if a borrower stops paying. It’s the reason Canadians can buy with as little as 5% down, and why insured mortgages often get the lowest rates.
When is it required?
Any mortgage with a down payment below 20% must be insured through CMHC, Sagen or Canada Guaranty. Insured mortgages are available on homes priced below $1.5 million.
How much does it cost?
| Down payment | Premium (% of mortgage) |
|---|---|
| 5% – 9.99% | 4.00% |
| 10% – 14.99% | 3.10% |
| 15% – 19.99% | 2.80% |
A 0.20% surcharge applies to 30-year amortizations. The premium is added to your mortgage, but in Ontario the 8% PST on the premium is due in cash at closing.
Example
$600,000 home, 10% down ($60,000). Mortgage: $540,000. Premium: 3.10% = $16,740 added to the mortgage. PST: $1,339 paid at closing.
See your own numbers with our True Cost of Buying calculator.