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CMHC
What is CMHC Mortgage Loan Insurance?
Find out if your down payment requires you to get mortgage loan insurance on your new home.
If you want to buy a home with a down payment of less than 20%, you’ll need mortgage loan insurance. This protects your lender in case you can’t make your payments.
Benefits
CMHC mortgage loan insurance lets you get a mortgage for up to 95% of the purchase price of a home. It also ensures you get a reasonable interest rate, even with your smaller down payment.
Mortgage loan insurance helps stabilize the housing market, too. During economic slumps when down payments may be harder to save, it ensures the availability of mortgage funding.
Minimum down payment
To get mortgage loan insurance, you’ll need a minimum down payment. The amount depends on the home’s purchase price:
- If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.
- If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.
- If the home costs $1,000,000 or more, mortgage loan insurance is not available.
Cost
Your lender pays an insurance premium on mortgage loan insurance. It’s calculated as a percentage of the mortgage and is based on the size of your down payment. Your lender will likely pass this cost on to you. You can pay it in a lump sum or add it to your mortgage and include it in your payments.
Sagen
Sagen is one of the 3 mortgage default insurance companies available to Canadians. The other 2 companies that provide mortgage default insurance are Canada Guaranty and CMHC. Sagen insurance provides mortgage lenders with mortgage default insurance allowing them to fund a mortgage with as little as 5% down payment. Without insurance protection, the banks would never take on that much risk and you’d need a 20% down payment to purchase a home. The long and short of it is, if your down payment is less than 20% of the purchase price, you will have to pay a mortgage premium. The Sagen fee that you pay is based on a sliding scale.
Sagen Mortgage Calculator
| Down Payment | 5-9.99% | 10-14.99% | 15-19.99% | 20% or more |
| Insurance Premium (% of mortgage amount) | 4% | 3.1% | 2.8% | 0% |
Example: If you purchase a home for $500,000 with a down payment of $50,000, from the table above your insurance premium would be 3.1% of amount borrowed. Your Sagen fee would be: $450,000 x .031 = $13,950
| Purchase Price | Down payment of 10% | Amount of purchase financed | Sagen cost ($450,000 x 0.031) | Total mortgage amount after Sagen fee added |
| $500,000 | $50,000 | $450,000 | $13,950 | $463,950 |
The cost of your Sagen fee ($13,950 in the above example) would then be added to your mortgage amount to give you a total mortgage amount of $463,950. Your mortgage payments are now based on a mortgage amount of $463,950.
- You cannot get a mortgage default insurance on a home purchase price above %1M, therefore you would need a 20% down payment.
- You cannot get mortgage default insurance on a home purchase where your amortization is more than 25 years. You can amortize for up to 30 years, if you are paying a down payment of 20% or more.
Canada Guarantee
What is Mortgage Default Insurance?
You’ve finally found that dream home. Mortgage insurance can help make it yours.
The combination of rising home prices, increasing taxes and unforeseen expenses related to homeownership can make saving for a 20 per cent down payment very difficult. However, with help from a lender or mortgage professional, along with the solutions provided by Canada Guaranty, your dreams of homeownership are well within reach. Find out how mortgage insurance can help unlock the door to your dream home, even sooner.
Mortgage insurance increases opportunities for homeownership.
Mortgage insurance offers you affordable options for purchasing a home. The innovative products developed by Canada Guaranty can help you become a homeowner with programs that are tailored to suit your individual needs.
What is mortgage default insurance?
Mortgage default insurance, commonly referred to as “mortgage insurance” helps Canadian consumers buy a home sooner and with a lower down payment. In fact, for qualified borrowers a home can be purchased with as little as five per cent down.
Mortgage insurance protects the lender and investor – not the homeowner – from losses related to borrower default and foreclosure. The cost of mortgage insurance depends on two factors:
- The type of mortgage applied for;
- The amount of the down payment
Your lender or mortgage professional can provide you with specific premium costs and benefits of using mortgage insurance for your unique loan.
Consumer Tip:
Mortgage insurance is often confused with other types of insurance associated with homeownership. Knowing the difference will help you understand what coverage is appropriate for your specific needs.
Mortgage insurance is not the same as:
- Homeowner/Property Insurance: A form of property insurance designed to protect the individual’s home (or possessions in the home) against damages, including loss, theft, fire, or other unforeseen disaster.
- Mortgage Life Insurance: A type of insurance designed specifically to repay any outstanding mortgage debt in the event of homeowner death or long-term disability.
How Mortgage Insurance Benefits You.
With a direct impact on your ability to purchase a home, mortgage insurance is one of the most cost-effective solutions for Canadian home buyers. It allows borrowers to take advantage of more flexible financing options, including lower down payments. Each year, more Canadians are benefiting from the choices mortgage insurance offers, including:
- The ability to purchase a home without having to save for a 20 per cent down payment.
- A comprehensive product suite designed to meet your unique financial and homeownership needs.
- Greater flexibility through affordable premiums and lower down payment options.
- The ability to port or transfer your mortgage insurance from one home to another, anywhere in Canada.
Transaction Types
- Purchase transactions.
- Purchase Advantage Plus™ eligible.
- Portable eligible.
Amortization
- Maximum 25 years.
Loan-to-Value Criteria
- 95% for Purchase: 1-2 units
- Purchase Price ≤ $500,000: Minimum 5% down payment required.
- Purchase Price > $500,000 and < $1,000,000: Minimum 5% down payment required on the first $500,000 of the purchase price, plus an additional 10% down payment required on the portion of the purchase price above $500,000.
- 90% for Purchase: 3-4 units
NOTE: Maximum LTV is subject to adjustments based on local housing market conditions.
Interest Rate Types
- Fixed, standard variable, capped variable and adjustable rate mortgages permitted.
- Borrower(s) must qualify at an interest rate that is the greater of the contract mortgage rate plus 2%, or 5.25%.
Property Types
- Maximum property value must be less than $1,000,000.
- Maximum 4 units, with 1 unit owner-occupied.
- Resale or new construction (single advance).
Borrower Qualifications
- Down payment must be from borrower’s own resources or gifted from a close family member.
- Standard underwriting guidelines apply.
- Maximum debt service ratios: GDS 39% / TDS 44%
Applicable Premiums
| Loan-to-Value Ratio | Single Premium | Top-Up Premium |
| ≤ 65% | 0.60% | 0.60% |
| 65.01%-75% | 1.70% | 5.90% |
| 75.01%-80% | 2.40% | 6.05% |
| 80.01%-85% | 2.80% | 6.20% |
| 85.01%-90% | 3.10% | 6.25% |
| 90.01%-95% | 4.00% | 6.30% |
