A mortgage that requires default insurance because the down payment is less than 20% of the purchase price. The insurance protects the lender (not the borrower) against loss if the borrower defaults. In Canada, mortgage insurance is provided by CMHC, Sagen, or Canada Guaranty. The premium ranges from 2.8% to 4% of the mortgage amount and is typically added to the mortgage balance.
Why It Matters
Mortgage insurance is the cost of entry for buyers who can't put 20% down, and in the GTA that's a lot of first-time buyers. While the premium adds thousands to your mortgage, insured mortgages often qualify for slightly lower interest rates, which can partially offset the cost. The premium is a one-time charge rolled into your payments.
Need Guidance?
Get a second opinion on your real estate situation. No pressure, no obligation.
The RAZZ Report
Market insights and practical advice delivered to your inbox.