Mortgage Default Insurance

If you want to buy a home with a down payment of less than 20%, you’ll need mortgage default insurance from one of the three insurers. This protects your lender in case you can’t make your payments.

Learn more about mortgage default insurance and how it works below.

Insurers in Canada

 

There are three insurers that offer mortgage default insurance in Canada:

  • Canada Mortgage and Housing Corporation (CMHC)

  • Sagen (previously Genworth)

  • Canada Guaranty

Benefits

 

Mortgage default insurance lets you get a mortgage of up to 95% of the purchase price of a home. It also ensures you get a reasonable interest rate, even with your smaller down payment.

 

To get mortgage default insurance, you’ll need a minimum down payment. The amount depends on the home’s purchase price:

  • If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.

  • If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.

  • If the home costs $1,000,000 or more, mortgage default insurance is not available.

 

Cost

 

Your lender pays an insurance premium on mortgage default insurance. It’s calculated as a percentage of the mortgage and is based on the size of your down payment. Your lender will likely pass this cost on to you but you can pay it in a lump sum or add it to your mortgage and include it in your payments.

Premiums

 

Premiums are based on the Loan to Value (LTV) and program used. LTV is calculated by dividing the amount borrowed by the appraised value of the property. The Amount borrowed is calculated by subtracting the down payment from the appraised property value.

 

CMHC – Standard

 

Loan To Value                          Standard Purchase Premium

Up to and including 65% ------------------------ 0.60%

Up to and including 75% ------------------------ 1.70%

Up to and including 80% ------------------------ 2.40%

Up to and including 85% ------------------------ 2.80%

Up to and including 90% ------------------------ 3.10%

Up to and including 95% ------------------------ 4.00%
Up to 95% Non-Traditional --------------------- 4.50%

Sagen – Standard

 

Loan To Value                          Standard Purchase Premium

Up to and including 65% ------------------------ 0.60%

Up to and including 75% ------------------------ 1.70%

Up to and including 80% ------------------------ 2.40%

Up to and including 85% ------------------------ 2.80%

Up to and including 90% ------------------------ 3.10%

Up to and including 95% ------------------------ 4.00%
 

Canada Guaranty – Standard

 

Loan To Value                          Standard Purchase Premium

Up to and including 65% ------------------------ 0.60%

Up to and including 75% ------------------------ 1.70%

Up to and including 80% ------------------------ 2.40%

Up to and including 85% ------------------------ 2.80%

Up to and including 90% ------------------------ 3.10%

Up to and including 95% ------------------------ 4.00%
Flex 90% Advantage -----------------------------  4.50%

 

 

This only demonstrates the standard purchase rates. The rates differ for other programs – rentals, investment properties, second mortgages, self-employed, borrowed down payment, etc. Please see insurer specific program guidelines on their websites.

Insurance Premium Calculators

 

CMHC

https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/homebuying-calculators/mortgage-calculator

 

SAGEN

https://www.sagen.ca/tools-and-resources/premium-calculator/

 

CANADA GUARANTY

https://www.canadaguaranty.ca/insurance-premium-calculator/

 

Available Insurance Programs

 

CMHC

https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/mortgage-loan-insurance-homeownership-programs/mortgage-loan-insurance-quick-reference-guide

 

SAGEN

https://www.sagen.ca/products-and-services/

CANADA GUARANTY

https://www.canadaguaranty.ca/products-at-a-glance/

 

New Programs

 

GREEN HOME INCENTIVE

Insurers offer a partial premium refund of up to 25% directly to borrowers who either buy, build or renovate for energy efficiency using insured financing. See the insurer websites for more details.

 

FAQs

 

Does Mortgage Default Insurance only apply to traditional single-family residential properties?

No, there are mortgage default insurance products on various property types including duplexes, condominiums, manufactured or mobile homes and many more, including rental and retirement homes. Please contact me for more details.

Does the borrower get to choose the Insurer?

Please contact me for more details.

          mortgage amount

           ------------------------

             property value

  LTV=

mortgage amount =

property value - down Payment