Mortgage Insurance

Explore mortgage insurance in Canadian real estate — how it works, who it protects, and what homebuyers need to know when putting less than 20% down.

Mortgage Insurance



What is Mortgage Insurance?

Mortgage insurance protects the lender—not the borrower—in case the borrower defaults on a high-ratio mortgage with a down payment under 20%.

Why Mortgage Broker Fees Matter in Real Estate

In Canada, mortgage insurance is mandatory for insured mortgages. It is typically provided through the Canada Mortgage and Housing Corporation (CMHC), Sagen, or Canada Guaranty.

Key characteristics include:
  • Required for down payments between 5% and 19.99%
  • Premiums are based on the loan-to-value (LTV) ratio
  • Cost is often added to the mortgage principal

Although it protects the lender, it enables buyers to enter the housing market with less capital. Premiums are non-refundable and do not reduce mortgage interest.

Understanding mortgage insurance helps buyers plan for total costs and choose between insured and conventional mortgages.

Example of Mortgage Insurance in Action

A buyer with a 10% down payment pays a 3.1% CMHC insurance premium, which is added to their mortgage balance.

Key Takeaways

  • Required for down payments under 20%.
  • Protects lenders, not borrowers.
  • Premium varies with LTV ratio.
  • Enables lower entry costs for buyers.
  • Offered through approved insurers.

Related Terms

Additional Terms

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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