Default insurance
Mandatory with less than 20% down. Protects the lender, gives you access to the market and usually a lower rate. Provided by CMHC, Sagen or Canada Guaranty.
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Mortgage Insurance
Mortgage insurance protects the lender if a borrower defaults on their payments — and it is what makes buying with less than 20% down possible.
Qualifying
How to qualify for mortgage default insurance
Since 15 December 2024, homes valued under $1.5 million are eligible for mortgage default insurance — up from the previous $1 million cap. Beyond price, lenders and insurers look at three numbers.
< 42%
Total Debt Service ratio
< 35%
Gross Debt Service ratio
680
Minimum credit score
The same December 2024 change also allows 30-year insured amortizations for first-time buyers and for purchasers of newly built homes. Your Gross Debt Service ratio is housing costs as a share of gross income. Your Total Debt Service ratio adds every other debt payment. Insurers apply their own overlays, so treat these as the benchmark rather than a guarantee.
Mortgage Insurance
How Do You Pay Mortgage Default Insurance?
Mortgage default insurance — also called mortgage insurance or loan insurance — is typically paid as a one-time premium at the time of closing and is added to your mortgage loan amount. The premium is calculated as a percentage of the total mortgage loan and is determined by factors such as the down payment amount, loan-to-value ratio and the specific insurance provider. This allows homebuyers to spread the cost of default insurance over the life of the mortgage through their regular payments.
It is worth being clear about what it does: default insurance protects the lender if a borrower stops paying. What it buys the borrower is access — the ability to purchase with as little as 5% down, usually at a lower interest rate than an uninsured mortgage of the same size.
Premium Schedule
What the premium costs
Premiums are charged on the loan amount and rise as your down payment falls.
| Loan-to-value | Down payment | Premium on loan amount |
|---|---|---|
| Up to 65% | 35% or more | 0.60% |
| 65.01% – 75% | 25% – 34.99% | 1.70% |
| 75.01% – 80% | 20% – 24.99% | 2.40% |
| 80.01% – 85% | 15% – 19.99% | 2.80% |
| 85.01% – 90% | 10% – 14.99% | 3.10% |
| 90.01% – 95% | 5% – 9.99% | 4.00% |
Premiums above 80% loan-to-value are mandatory. In Ontario, provincial sales tax on the premium must be paid in cash at closing — it cannot be added to the mortgage. Rates are those published by Canada’s default insurers and are subject to change.
Not The Same Thing
Three kinds of “mortgage insurance”
Mortgage life & disability
Optional coverage that pays out your balance if you die or cannot work. Always compare it against a personally owned term life policy before signing the lender’s form.
Title insurance
A one-time policy protecting you and your lender against title fraud, survey issues and registration errors. Almost always arranged by your real estate lawyer.
Let’s talk through your options.
Book a 15-minute mortgage strategy call. No application, no credit pull — just a straight conversation about what you are trying to do and how the lending market would treat it.