What is Mortgage Loan Insurance?
In Canada, if your down payment is less than 20% of the home's price, you typically need mortgage loan insurance. This insurance protects the lender, not the borrower—if you default, the insurer pays the lender. It allows lenders to accept low down payments and helps more people buy homes.
Mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC) and other insurers. CMHC is a federal housing agency.
Who Needs It
According to CMHC, buyers with a down payment under 20% usually need insurance. Qualification includes:
- Down payment below 20%
- Loan amount within CMHC limits (check official site)
- Property type eligible (e.g., owner-occupied, some multi-unit)
Official site does not list specific income thresholds or loan caps; check at time of application.
Cost
Insurance premium is a percentage of the loan amount, depending on down payment and amortization. Lower down payment means higher premium. No specific rates are listed on the official page; get a quote from your lender or CMHC.
How to Buy
Insurance is usually arranged by your lender (bank or mortgage broker). You don't apply separately. When you apply for a mortgage, the lender determines if insurance is needed and adds the premium to your loan or charges it upfront.
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