MORTGAGE BASICS · EXPLAINED
Mortgage default insurance in Canada: what it is, how it works, and who it's actually for
If your down payment is less than 20%, Canadian law requires your mortgage to carry default insurance before a lender can approve it. It's one of the most misunderstood parts of buying a home — and also the reason hundreds of thousands of Canadians get into the market years earlier than they otherwise could. Here's the plain-English version: what it is, how it applies to you, what it actually does, and how CMHC, Sagen, and Canada Guaranty compare.
Educational only — not personalized financial advice. Your down payment, price range, and file all matter. That's the conversation to have with Rahul.
Quick estimate
See your payment instantly
Adjust the numbers below to see your estimated payment in seconds.
Payment frequency
Estimated monthly payment
$2,565.26/mo
Rahul Bedi — Mortgage Broker
Quick mortgage payment estimate
September 21, 2026
Your inputs
- Purchase price: $500,000
- Down payment: 10% ($50,000)
- Rate: 4.49%
- Amortization: 25 years
- Payment frequency: Monthly
What is mortgage default insurance?
It protects the lender, not you. Despite the consumer-sounding name, it doesn't make your payments for you and it doesn't protect your credit if you miss payments. If the mortgage ever went into default, the insurer covers the lender's loss — that's the whole product.
It's required by federal regulation on every "high-ratio" mortgage — any mortgage where the down payment is under 20%, meaning the loan-to-value is over 80%. You'll also see it called "mortgage loan insurance," or generically "CMHC insurance" even when a different company underwrites it.
Without it, most lenders legally couldn't offer a mortgage to someone putting down less than 20% — it's the exact mechanism that makes 5%-down homeownership possible in Canada. You never apply for it separately either; your lender arranges it automatically as part of underwriting once your file qualifies as high-ratio.
How it applies to you
Minimum down payment
- Homes up to $500,000: minimum 5% down
- Homes $500,000–$1,500,000: 5% on the first $500,000, plus 10% on the portion above $500,000
- Homes $1,500,000 and up: minimum 20% down, and insurance isn't available at all — that's "conventional" territory no matter how much you put down
The other eligibility rules
- Maximum amortization: 25 years standard, extendable to 30 years for first-time buyers or new-construction purchases (small surcharge — see premiums below)
- Minimum credit score: 600 (680+ makes for the smoothest approval)
- Debt service ratios: GDS 39% or less, TDS 44% or less
What it actually does
The premium is one-time, not recurring, and it's calculated as a percentage of your total mortgage amount — not the home price. In most provinces it's added to your mortgage principal, so you don't need extra cash for it. The exception is the provincial sales tax portion, which is charged upfront and can't be financed in Ontario, Quebec, Saskatchewan, and Manitoba.
| Loan-to-value (LTV) | Premium rate |
|---|---|
| ≤65% LTV | 0.60% |
| 65–75% LTV | 1.70% |
| 75–80% LTV | 2.40% |
| 80–85% LTV | 2.80% |
| 85–90% LTV | 3.10% |
| 90–95% LTV | 4.00% |
| 30-year amortization surcharge (first-time buyers / new builds) | +0.20% |
Here's what that actually looks like in dollars
$450,000 home, 5% down
- Down payment: $22,500
- Base mortgage: $427,500
- Premium at 4.00%: $17,100
- Total mortgage: $444,600
Want the same math on your own price range? Run it through the mortgage payment calculator.
Worth knowing even if you have 20% down: whether a mortgage is insured, insurable, or uninsured is what sets the rate a lender quotes you. The three categories are compared side by side here.
Who it's actually for
An insured mortgage makes sense
- First-time buyers who don't have a full 20% down payment saved
- Buyers who'd rather get into the market now than spend years saving more while prices and rates move
- Buyers combining an insured mortgage with a program like Nova Scotia's DPAP or the federal GST/HST new-build rebate
- Buyers with solid income and credit but limited savings
Not required — or not available
- Buyers putting 20% or more down — that's a "conventional" mortgage: no insurance, no premium, and more lender choice
- Homes priced at $1.5 million or more — not eligible regardless of how large the down payment is
- Most rental and investment purchases bought purely for income — they need 20%+ down (CMHC has a separate multi-unit rental insurance product for larger residential rental buildings, a different program entirely)
CMHC vs Sagen vs Canada Guaranty
Three companies insure mortgages in Canada. Most buyers never think about which one ends up on their file — but the differences matter when a file is anything but plain vanilla.
CMHC
Canada Mortgage and Housing Corporation — the federal Crown corporation most people mean when they say "CMHC insurance."
- Market share
- Largest of the three — roughly 59% of insured mortgages as of late 2025.
- Who backs it
- 100% backed by the Government of Canada.
- Known for
- Also insures multi-unit residential and rental buildings, and runs the Eco Plus program — up to a 25% premium refund for qualifying energy-efficient homes.
Sagen
Formerly Genworth Canada — the largest private mortgage default insurer in the country.
- Market share
- Roughly 24% market share.
- Who backs it
- 90% government-backed / 10% Sagen-backed.
- Known for
- Known for flexibility on alternative-income and self-employed files, plus strong newcomer-to-Canada programs.
Canada Guaranty
The third insurer in the market, and often the one that makes a file work when the other two won't.
- Market share
- Roughly 17% market share.
- Who backs it
- Same government-backstop structure as Sagen.
- Known for
- Runs its own flexible income-qualification and newcomer programs — often the alternative when a file doesn't fit CMHC's exact guidelines.
On a standard homeowner purchase, all three charge the identical premium — the rate tiers above apply no matter which one insures your file. You don't choose the insurer; your lender does, based on whichever one's guidelines best fit your income type, credit history, or property. That call is exactly the kind of judgment Rahul makes for you.
Common questions
Does mortgage default insurance protect me if I lose my job or can't pay?
No — it protects the lender, not you. Payment protection for your own income is a separate product (mortgage life/disability insurance), not default insurance.
Can I choose CMHC, Sagen, or Canada Guaranty myself?
Not directly — your lender selects the insurer based on which one's underwriting guidelines fit your file. Rates are identical across all three for standard purchases, so it rarely changes your cost.
Is the premium a one-time or ongoing cost?
One-time, calculated once at closing on your total mortgage amount. It's usually added to your mortgage principal so you don't need cash for it — except the provincial sales tax portion in Ontario, Quebec, Saskatchewan, and Manitoba.
How do I avoid paying default insurance at all?
Put down 20% or more (a conventional mortgage), or make sure you're not financing more than 80% of a home priced under $1.5 million.
Does a bigger down payment always lower my total cost?
Usually, yes — the premium rate drops meaningfully as your down payment climbs through the tiers, so even moving from 5% to 10% or 15% down can save thousands.
What is Canada Guaranty?
Canada Guaranty is one of the three companies that provide mortgage default insurance in Canada, alongside CMHC and Sagen. It's a private insurer with the same government-backstop structure as Sagen, so lenders treat its coverage the same way CMHC's is treated.
Is Canada Guaranty the same as CMHC?
No. CMHC is a federal Crown corporation; Canada Guaranty is a private company. On a standard homeowner purchase the premium you pay is identical either way — the real difference is underwriting guidelines, which is why a file that doesn't fit one insurer can still be approved through another.
Can I ask my lender to use Canada Guaranty instead of CMHC?
You can ask, but the lender makes the call. Lenders route each file to whichever insurer's guidelines fit it best. Canada Guaranty and Sagen are often the route for self-employed, newcomer, and alternative-income files that don't line up exactly with CMHC's guidelines.
How much is mortgage default insurance in Canada?
The premium is a percentage of your mortgage amount and depends on your down payment: the smaller the down payment, the higher the rate. With 5% down (95% loan-to-value) it's the top tier, and the rate steps down at 10% and 15% down. The rate table above shows every tier, plus the surcharge that applies to a 30-year amortization.
What Rahul actually looks at with you
"Do I need CMHC?" is rarely the real question. Here's the short list Rahul walks through instead:
- Which down payment tier you're actually in, and whether inching up a few points changes your premium meaningfully
- Whether a 30-year amortization is worth the small surcharge for your specific file
- Which insurer's guidelines best fit your income type — salaried, self-employed, newcomer, or alternative credit
- Whether combining insured financing with a program like DPAP or the GST/HST rebate gets you into a home sooner
- The real, all-in number — premium included — before you write an offer
Want your real numbers before you write an offer?
Tell Rahul your price range and how much you have for a down payment. Fifteen minutes, no pitch — you'll know your exact insurer tier, premium, and total mortgage before you look at another listing.
902-223-8003 · NS Broker #3000996 · NB License #260053601 · AB RECA #LIC-00668583 · BC Broker #MB612306 · Ontario License #M26001833 (FSRA)