Mortgage Default Insurance

Mortgage default insurance is required in Canada for all High-Ratio Mortgages. That is, mortgages where the Down Payment is less than 20% of the value of the home. Mortgage insurance must be purchased by the homeowner but it is used to protect the lender against Mortgage Default.

Mortgage insurance is typically purchased through the Canada Mortgage and Housing Corporation (CMHC), which is a crown corporation (part of the federal government). It can also be purchased through private insurers.

The cost of mortgage default insurance varies based on the percentage of the down payment that you have applied. Insurance premiums are typically between between 0.5% and 3% of the borrowed amount, per annum. These premiums are higher for self-employed borrowers.