Mortgage default insurance
Often called CMHC insurance, this protects the lender if the borrower defaults. CMHC is one provider; Sagen and Canada Guaranty also insure mortgages in Canada.
Learn about mortgage insuranceThe answer depends on which insurance you mean. A down payment of at least 20% will generally avoid mortgage default insurance, while mortgage life, disability, critical illness, and job-loss insurance are optional products you can decline.
Usually required when your down payment is below 20%. It protects the lender, not the borrower.
Mortgage life and related creditor insurance are not required for mortgage approval and require your consent.
“Mortgage insurance” can describe lender protection, optional life or disability coverage, or even title insurance. Each product solves a different problem.
Before trying to avoid a cost, confirm what the policy protects, who receives the benefit, and whether the product is required or optional.
Often called CMHC insurance, this protects the lender if the borrower defaults. CMHC is one provider; Sagen and Canada Guaranty also insure mortgages in Canada.
Learn about mortgage insuranceThis may pay the insured mortgage balance to the lender after an approved death claim. You do not need it to qualify for a mortgage and may compare it with personal life insurance.
Review mortgage life insuranceTitle insurance addresses certain ownership, title, survey, fraud, or registration risks. It is not the same as mortgage default insurance or life insurance.
Review common insurance questions
The simplest route is a 20% down payment, but buyers can also reduce the premium by lowering the loan-to-value ratio. The best approach depends on the home price, purchase timing, available savings, and lender rules.
For a home priced at $500,000 or less, the federal minimum is generally 5%. From more than $500,000 to below $1.5 million, it is generally 5% of the first $500,000 plus 10% of the remaining price. Reaching 20% is the usual threshold for avoiding default insurance.
A conventional mortgage generally does not require mortgage default insurance when the borrower contributes 20% or more.
A smaller price can reduce both the down payment needed to reach 20% and the monthly cost of the resulting mortgage.
Default-insurance premiums generally decrease as the borrower’s equity increases, so the decision is not always all-or-nothing.
An FHSA and the Home Buyers’ Plan may help eligible buyers build the down payment, but tax rules, eligibility, and future repayment obligations should be reviewed.
Consider rent, market movement, interest rates, lost investment growth, and the value of keeping cash available after closing.
Federal insurance rules provide the foundation, but the amount of cash required—and the risk of delaying a purchase—can look very different by region and property type.
Toronto-area buyers often need to balance the 20% target against land transfer taxes, legal costs, condo adjustments, moving expenses, and the need for a post-closing reserve.
Review Ontario mortgage insuranceIn higher-priced BC markets, buyers should compare the insurance premium with the time needed to save more, property transfer costs, and the risk of using nearly all liquid savings.
Review BC mortgage insuranceBuyers may have a shorter path to 20% than in Canada’s highest-priced markets, yet should still compare rent, available inventory, closing costs, and emergency savings.
Review Alberta mortgage insuranceAppraisal, condition, occupancy, road or ferry access, water and septic systems, and lender appetite can affect financing. Confirm property eligibility before relying on a specific insurance strategy.
Ask a property-specific questionAvoiding the premium is valuable, but the best mortgage structure depends on the complete borrowing picture—not one cost in isolation.
An insured mortgage may allow an eligible buyer to purchase sooner with less cash upfront.
A conventional mortgage generally avoids the mortgage default-insurance premium.
A home purchase includes more than the down payment. Build a closing budget for your province and municipality, then keep a realistic reserve for the first months of ownership.
A buyer who reaches exactly 20% but cannot comfortably cover closing adjustments, repairs, or an income interruption may be taking more risk than a buyer who chooses an insured mortgage with stronger liquidity.
Registered savings programs can help some buyers reach a larger down payment, but contribution limits, withdrawal rules, eligibility, and repayment obligations matter.
Eligible first-time buyers may generally contribute up to $8,000 per year, subject to available room, and up to the $40,000 lifetime limit. Qualifying contributions may be deductible and a qualifying home withdrawal may be tax-free.
Review FHSA rulesEligible participants may currently withdraw up to $60,000 from an RRSP for a qualifying home. The amount must be repaid under the program’s rules, generally over a period of up to 15 years.
Review HBP rulesDown-payment sources may include personal savings, proceeds from another property, or an eligible non-repayable gift. Lenders normally require documentation showing the source and history of funds.
Ask about preparing documentsMortgage life, critical illness, disability, and job-loss coverage offered with a mortgage are optional. A federally regulated lender must obtain your express consent and explain applicable charges and cancellation conditions.
Before declining all protection, compare the lender’s coverage with your workplace benefits, emergency savings, and a personal policy. Personal term life insurance may offer a level benefit paid to the beneficiary you choose rather than directly to the lender.
Review workplace life, disability, and critical illness benefits, including maximum amounts and what happens if employment changes.
Confirm exclusions, underwriting timing, benefit limits, age reductions, portability, and how an approved claim is paid.
Look at who owns the policy, who receives the payout, whether the benefit decreases, and what happens if you refinance or switch lenders.
Do not create an unintended protection gap. Confirm that any replacement policy is active before cancelling existing coverage.
The next useful page depends on whether you are planning the down payment, comparing optional protection, or ready to review a quote.
Estimate how the purchase price and down payment may affect the mortgage default-insurance premium.
Use the insurance calculatorCompare mortgage-linked creditor coverage with personal life insurance and review who controls the benefit.
Compare mortgage life insurance quotesShare the home price, down payment, province, borrower details, and the product you are trying to avoid or replace.
Start a quote conversationReview how mortgage insurance works and why default insurance is different from borrower protection.
Open the mortgage insurance guideReview the information that can affect pricing before comparing a lender offer or personal policy.
Review pricingFind direct answers about eligibility, beneficiaries, cancellation, refinancing, and policy comparisons.
View the FAQDirect answers for Canadian buyers comparing a larger down payment, mortgage default insurance, and optional mortgage protection.
Generally, yes. A mortgage with at least 20% down is normally considered conventional and does not require mortgage default insurance. The lender may still apply its own borrower and property requirements.
You generally cannot simply opt out of mortgage default insurance when the lender requires it for a high-ratio mortgage. You may increase the down payment, lower the purchase price, or consider another financing structure for which you qualify.
Insured mortgage financing for homeowner purchases is generally available only when the purchase price is below $1.5 million. A home priced at $1.5 million or more therefore generally requires at least 20% down.
No. Mortgage life insurance and related creditor insurance are optional products. You do not need to buy them for a lender to approve your mortgage, and a federally regulated institution must obtain your express consent.
Optional mortgage insurance can generally be cancelled, but you should check the certificate or agreement for the required process and effective date. Confirm replacement coverage is active before cancelling if your household still needs protection.
No. Mortgage rates and terms depend on the lender, borrower, property, amortization, loan structure, and market conditions. Some insured and insurable mortgages may receive different pricing, so compare the total cost rather than assuming the lowest down payment always produces the highest or lowest rate.
Not automatically. Compare the insurance premium with rent, home-price changes, interest rates, the time needed to save, and the benefit of keeping an emergency reserve. The better choice depends on your finances and local market.
Eligible buyers may use a qualifying FHSA withdrawal and a Home Buyers’ Plan withdrawal for the same home if they meet the rules for both programs. Review contribution, eligibility, timing, and HBP repayment requirements before relying on the funds.
No. Title insurance addresses certain title, ownership, registration, survey, or fraud risks. Mortgage default insurance protects the mortgage lender if the borrower defaults.
No refund or automatic cancellation generally occurs just because your equity later reaches 20%. The premium is associated with the insured mortgage when it is arranged, although portability or premium-credit rules may be relevant when moving or increasing a mortgage.
Share the purchase price, planned down payment, province, closing timeline, and the insurance product you are reviewing. Use that context to compare the premium, available cash, and optional protection needs.
General educational information only. Mortgage, insurance, tax, legal, and eligibility rules can change and may vary by lender, insurer, borrower, province, property, and transaction.
