5 Year Fixed 2.44%

5 Year Variable 2.30%

Mortgage Default Insurance

For most people the hardest part of buying a home, especially the first one, is saving for the down payment. Many people will not have 20% of the purchase price to put down, but with mortgage loan insurance you can put as little as 5% down. 

Mortgage loan insurance protects the lender from default and most Canadian lending institutions are required by law to have it.  If the borrower defaults (fails to pay) on the mortgage, the lender is reimbursed by the insurer. The cost for this coverage is in the form of an insurance premium which is often added to the mortgage, or you can choose to pay in a single lump sum at the time of closing.

Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guarantee are three major providers of this type of insurance in Canada and their current loan premiums are as follows:

Financing Required

Premium % of Loan Amount

80.01 to 85%

1.80%

85.01 – 90%

2.40%

Between 90.01 and 95%
 Traditional Down Payment Flex Down

(Borrowed Down payment)

3.60%
3.85%

*Premiums in Ontario are subject to provincial sales tax and premiums in Quebec are subject to provincial sales tax — the sales tax cannot be added to the loan amount.

Insurance premiums are calculated based on the mortgage amount.

 

Down Payment Requirement Changes February 2016 

The down payment rule implemented in February 2016 apply to people who have a down payment of less than 20% and therefore require mortgage default insurance. With the rule coming into play on February 15, 2016, the minimum down payment will rise to 10% from the current 5% for the portion of a house price that exceeds $500,000

To break this down, the minimum down payment for a $600,000 home would increase to $35,000 from $30,000. That’s 5% ($30,000) on the first $500,000 and 10% ($5,000) on the next $100,000 in price. The blended down payment in this case would be 5.8%