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Canadian mortgage default insurance guide

What is an insured mortgage in Canada?

An insured mortgage is a home loan protected against borrower default by mortgage loan insurance. The insurance protects the lender—not the homeowner—and is commonly required when the buyer’s down payment is below 20%.

Direct answer

For most owner-occupied home purchases under $1.5 million, a down payment below 20% usually creates a high-ratio insured mortgage. The lender arranges the insurance through CMHC, Sagen, or Canada Guaranty, and the borrower normally pays the premium.

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Who is protected? The mortgage lender is protected if the borrower defaults.
Who pays? The borrower generally pays a one-time insurance premium.
When is it common? When the down payment is less than 20% of the purchase price.
Insured mortgage formula

Smaller down payment, lender protection

Mortgage default insurance can make a purchase possible with less than 20% down, but the premium increases the total borrowing cost.

Canadian buyer reviewing an insured mortgage, down payment, and mortgage insurance premium
Purchase price − Down payment + Insurance premium
Plain-language definition

An insured mortgage protects the lender against default

If the borrower stops making payments and the lender suffers a covered loss after enforcing the mortgage, the mortgage insurer may compensate the lender under the insurance contract. The borrower remains responsible for the mortgage debt and related obligations.

  • The lender submits the mortgage-insurance application.
  • The home, borrower, down payment, credit, income, and debt levels must meet applicable rules.
  • The premium is based mainly on the loan-to-value ratio.
  • The premium may usually be paid upfront or added to the mortgage balance.
Current Canadian framework

Three rules determine whether a purchase is typically insurable

A smaller down payment is only one part of the decision. The purchase price, property use, amortization, borrower qualification, and insurer standards also matter.

DP

Minimum down payment

The minimum is generally 5% for a home priced at $500,000 or less. From $500,000 to under $1.5 million, it is 5% of the first $500,000 plus 10% of the amount above $500,000.

CAP

Purchase-price ceiling

A home priced at $1.5 million or more generally requires at least 20% down and falls outside standard high-ratio insured-purchase eligibility.

30Y

Amortization eligibility

Eligible first-time buyers and buyers of newly built homes may qualify for a 30-year insured amortization. Other insured purchases commonly use a maximum 25-year amortization.

Minimum down-payment examples

How the insured-mortgage threshold works at different home prices

These examples show the current minimum down-payment calculation. They do not include closing costs, provincial taxes, legal fees, adjustments, appraisal costs, or the mortgage-insurance premium.

Example purchase price $450,000
5% of $450,000$22,500
Minimum down payment$22,500

Common in many condos, townhomes, and smaller-market purchases, depending on local pricing.

Example purchase price $800,000
5% of first $500,000$25,000
10% of remaining $300,000$30,000
Minimum down payment$55,000

A realistic comparison point for many urban and suburban Canadian markets.

Example purchase price $1,400,000
5% of first $500,000$25,000
10% of remaining $900,000$90,000
Minimum down payment$115,000

Relevant to higher-cost markets, but the borrower and property must still meet insurer and lender rules.

Canadian homebuyer comparing mortgage amount, down payment, and mortgage default insurance cost
How the premium works

A higher loan-to-value ratio usually means a higher premium rate

The premium is generally calculated as a percentage of the mortgage before the premium is added. Your lender provides the exact amount after the insurer reviews the application.

Up to 80% loan-to-value0.60%–2.40%
80.01%–85% loan-to-value2.80%
85.01%–90% loan-to-value3.10%
90.01%–95% loan-to-value4.00%
90.01%–95% with non-traditional down payment4.50%

Premium schedules and surcharges can change. Ontario, Quebec, and Saskatchewan apply provincial sales tax to mortgage loan insurance premiums; that tax cannot be added to the mortgage amount and is normally paid at closing.

Use the CMHC mortgage insurance calculator
Local market reality

The same federal rules can feel different across Canadian housing markets

Home type, local price range, appraisal support, municipal taxes, condo fees, rental income, and property condition all affect how an insured-mortgage application works in practice.

Toronto & Vancouver regions

Condos and higher purchase prices

Buyers may use the higher insured-mortgage price ceiling for qualifying homes under $1.5 million. Condo fees, property taxes, parking, storage, and special-assessment risk still affect affordability and lender review.

Montréal & Québec markets

Condos, divided co-ownership, and plexes

Confirm the legal property structure, owner-occupancy plan, number of units, and rental-income treatment. Quebec sales tax on the insurance premium must be budgeted as a closing cost rather than financed into the mortgage.

Calgary, Edmonton & Prairies

New builds, townhomes, and detached homes

Builder deposits, possession dates, condo-document review, landscaping, appliances, and property-tax adjustments can require cash beyond the minimum down payment.

Ottawa, Halifax & growing centres

First-time buyers and new construction

Eligible first-time buyers and purchasers of newly built homes may compare a 30-year insured amortization with a shorter schedule. Lower monthly payments can mean more total interest and may involve an insurance-premium surcharge.

Small towns & rural Canada

Well, septic, acreage, and marketability

A property can be affordable yet require extra review because of private services, access, outbuildings, zoning, land size, condition, or limited comparable sales. Insurer and lender acceptance should be confirmed before removing financing conditions.

Across Canada

Owner-occupied multi-unit properties

Duplexes, triplexes, fourplexes, and homes with secondary suites can involve different down-payment, occupancy, appraisal, and rental-income rules. Provide leases, market-rent support, permits, and unit details early.

Know the terminology

Insured, insurable, and uninsured mortgages are not interchangeable

These terms describe how the lender manages default risk. They do not describe mortgage life insurance or whether the homeowner has personal protection.

Mortgage type Typical down payment Who arranges insurance? Who normally pays the premium? What to compare
High-ratio insured mortgage Less than 20% The lender submits the loan to a mortgage insurer The borrower usually pays the transactional premium Premium, rate, amortization, qualification, closing cash, and portability
Insurable mortgage Often 20% or more The lender may insure the loan individually or through portfolio insurance The lender may absorb the insurance cost rather than itemizing it to the borrower Rate, term, property eligibility, amortization, and lender restrictions
Uninsured mortgage Usually 20% or more No mortgage-default insurer covers the loan No mortgage-default-insurance premium is charged for that loan Rate, stress-test qualification, flexibility, property type, and refinancing needs
Mortgage life insurance Not determined by down payment A lender, bank, insurer, or advisor may offer it separately The insured borrower pays the premium Beneficiary, benefit amount, underwriting, portability, exclusions, and alternatives
Read the insured vs uninsured mortgage comparison
Before making an offer

What lenders and insurers may review

A minimum down payment does not guarantee approval. The lender and insurer assess whether the borrower, property, and mortgage structure fit their requirements.

  • Verified income, employment, and income stability
  • Credit history, existing debts, and payment record
  • Gross and total debt-service ratios
  • Source and timing of the down payment
  • Purchase price, appraisal, and property condition
  • Owner occupancy and number of residential units
  • Property taxes, heating costs, condo fees, and other housing expenses
  • Mortgage term, amortization, and qualifying interest rate
Continue your research

Compare mortgage structures, calculate the premium, review pricing, or get help interpreting a lender’s insured-mortgage requirement.

Insured vs Uninsured Mortgage

Compare down payments, insurance, rates, qualification, and flexibility side by side.

Mortgage Insurance FAQ

Review common questions about premiums, claims, lenders, beneficiaries, and mortgage terms.

Support

Get help understanding a lender document, premium, certificate, or next step.

Pricing

Review the factors that can affect mortgage-related insurance costs and quote comparisons.

Mortgage Insurance Canada

Understand the national default-insurance framework and common borrower questions.

CMHC Insurance Calculator

Estimate a mortgage-default-insurance premium using the purchase price and down payment.

Mortgage Life Insurance

Learn how optional lender-connected life coverage differs from mortgage default insurance.

Mortgage Life vs Term Life

Compare household protection, beneficiaries, portability, and policy control.
Frequently asked questions

Insured mortgage FAQs for Canadian homebuyers

Direct answers about lender protection, down payments, premiums, amortization, closing costs, rates, and local property considerations.

What does “insured mortgage” mean in Canada?

It means the mortgage loan is insured against loss caused by borrower default. The lender is protected under the mortgage-default-insurance contract. The insurance does not provide life, disability, or home-damage coverage to the borrower.

Is mortgage default insurance mandatory with less than 20% down?

It is typically required when the down payment is below 20%, provided the mortgage and property qualify for insurance. A lender may also require insurance in some higher-risk situations even when the borrower has 20% down.

What is the maximum home price for an insured mortgage?

Standard high-ratio mortgage insurance is generally available for qualifying homes priced below $1.5 million. A purchase price of $1.5 million or more normally requires a minimum 20% down payment.

Can an insured mortgage have a 30-year amortization?

Eligible first-time homebuyers and buyers of newly built homes may use a 30-year insured amortization. Eligibility rules still apply, and an amortization longer than 25 years may carry an additional insurance-premium surcharge.

How much does mortgage default insurance cost?

The premium depends mainly on the loan-to-value ratio and the insurer’s program. Current standard homeowner schedules generally range from 0.60% to 4.50% of the mortgage amount, with higher rates applying when the borrower finances a larger percentage of the home’s value.

Can the insurance premium be added to the mortgage?

The mortgage-insurance premium may usually be added to the mortgage, which means the borrower pays interest on it. Provincial sales tax on the premium in Ontario, Quebec, and Saskatchewan cannot be added to the mortgage and must be budgeted for closing.

Does an insured mortgage always have a lower interest rate?

Not always. Lenders may price insured, insurable, and uninsured mortgages differently because their risk and funding costs differ. Compare the interest rate, insurance premium, amortization, prepayment terms, penalties, and total borrowing cost rather than judging the mortgage by rate alone.

Can a condo, duplex, or rural home qualify?

Many condos and owner-occupied one-to-four-unit properties may qualify, but the lender and insurer review the property, legal use, appraisal, occupancy, condition, marketability, and other program rules. Rural services, land size, zoning, condo finances, and rental units may require additional documentation.

Does mortgage default insurance protect my family if I die?

No. Mortgage default insurance protects the lender against default-related loss. Mortgage life insurance or personal life insurance is separate coverage intended to address an approved death claim under its own policy terms.

Prepare a useful mortgage comparison

Know the full cash requirement before choosing the smallest down payment

Share the purchase price, location, property type, occupancy plan, available down payment, closing timeline, and whether you are a first-time buyer or purchasing a new build. That context helps separate minimum eligibility from a mortgage that fits the household budget.

Purchase price and property location Down payment amount and source Property type, units, and occupancy plan Income, debts, closing date, and amortization goal
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Canadian homebuyer preparing details for an insured mortgage comparison

General educational information only. Mortgage-insurance rules, premiums, programs, qualification standards, property eligibility, taxes, and lender requirements can change and may vary by insurer, lender, province, territory, and transaction.