Mortgage Default Insurance
Canada Mortgage and Housing Corporation (CMHC) is Canada's national housing agency. CMHC is committed to helping Canadians access a wide choice of quality, affordable homes, while making vibrant, healthy communities and cities a reality across the country. CMHC works to enhance Canada's housing finance options, assist Canadians who cannot afford housing in the private market, improve building standards and housing construction, and provide policymakers with the information and analysis they need to sustain a vibrant housing market in Canada.
Mortgage loan insurance is typically required when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5%. In Canada, mortgage loan insurance is available from CMHC (a Crown corporation) and from private mortgage loan insurers and is backed by the Government of Canada. The Minister of Finance sets the parameters related to the government guarantee of mortgage loan insurance. Since government-backing applies to all insurers, CMHC and private sector insurers must operate within these parameters.
Since 1954, CMHC’s role in providing mortgage loan insurance products and tools has helped shape Canada’s housing market and has contributed to its stability in both good and bad economic times. CMHC provides qualified Canadian buyers across the country with better access to loans to help them meet their housing needs.
CMHC’s mortgage loan insurance activity is comprised of transactional homeowner insurance (high ratio and low ratio homeowner mortgage loans), portfolio insurance and multi-unit residential insurance. Mandated to operate on a commercial basis, this activity is self-sustaining and does not receive funding, in whole or in part, from parliamentary appropriations. The premiums and fees it collects and interest it earns must cover related claims and other expenses and also provide a reasonable return to the Government.