What is mortgage default insurance?

Mortgage default insurance, commonly referred to as CMHC insurance, is mandatory in Canada for down payments between  5% and less than 20%. Mortgage default insurance protects lenders, if a borrower stops making payments and defaults on their mortgage loan. Your default insurance premium is added to your mortgage amount and paid off over the life of your loan.

It allows Canadians, who might not otherwise be able to purchase homes, to gain entry into the Canadian real estate market. Mortgage rates would be higher without default insurance, because the risk of default would increase. Mortgage default insurance gives lenders the ability to offer lower mortgage rates when mortgages are protected by mortgage default insurance, because the risk of default is passed along to the mortgage insurer.

Qualification Requirements For Mortgage Default Insurance

  • The maximum amortization for insured mortgages is 25 years.
  •  If the purchase price is $500,000 or less, the minimum downpayment required is 5%
  • If the purchase price is between $500,000 - $999,999, the minimum down payment is 5% of the first $500,000, and 10% of the remaining amount
  • Mortgage default insurance is not available on homes purchased for more than $1 million, this means that a 20% down payment is required on these homes

Who offers mortgage default insurance?

There are three mortgage default insurance providers in Canada: The Canada Mortgage and Housing Corporation (CMHC)Genworth Financial and Canada Guaranty.

*This calculator is for illustrative purposes only. does not guarantee the accuracy, reliability or completeness of any information or calculations provided by this calculator. is not be liable for loss or damage of any kind arising from the use of this tool. Please consult with a mortgage and/or lending professional to review your options.

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