HomeOpeners®: Mortgage Insurance 101

Mortgages for
Self-Employed

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Mortgages for
New Canadians

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Mortgages for Purchases with Renovations

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Mortgages for
Vacation Homes

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Mortgages for
Secondary Homes

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Mortgages for
Custom Homes

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Mortgages for
Immediate Family Members

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Mortgage Default Insurance, commonly referred to as Mortgage Insurance, allows homebuyers to achieve the dream of homeownership with a low down payment.

There are two types of mortgage options:

  • conventional mortgages - on loans with a minimum 20 per cent down payment
  • high-ratio mortgages - on loans with a less than 20 per cent down payment

In Canada, mortgage insurance is required federally on high-ratio mortgages – that is, mortgages with a down payment of 20 per cent or less. This insurance, which protects the lender in case of borrower default, gives lenders the flexibility to offer borrowers with low down payments the same low interest rates they would offer to homebuyers with more equity.

Mortgage insurance premiums are based on the amount of the mortgage and although they can be paid in a lump sum upon closing, they are normally added to the mortgage amount and paid over the length of the mortgage.

This insurance is not to be confused with mortgage life insurance which protects homeowners and their families in the event of death or illness.

For more information and resources to help understand mortgage insurance and the overall homebuying process, visit our Homebuyers section at www.homeownership.ca