When mortgage insurance is required
In Canada, default insurance is generally required when the down payment is under 20% (a high-ratio mortgage). The premium is a percentage of the loan, set by loan-to-value. Typical owner-occupied rates: 4.00% at 5–9.99% down, 3.10% at 10–14.99% down, 2.80% at 15–19.99% down. At 20% down or more, insurance is usually not required.
The premium is often added to the mortgage balance. It protects the lender, not you. Minimum down payment is commonly 5% on the first $500,000 of price and 10% on the rest, up to the current insured-price cap (check CMHC; it has been $1.5 million). This page does not apply amortizations over 25 years, non-traditional down payments, or energy-efficient discounts.
Worked example
A $600,000 home with 10% down ($60,000) leaves a $540,000 loan. At 10–14.99% down the typical premium is 3.10%, about $16,740, often added to the mortgage. At 5% down the rate is 4.00% on a larger loan, so the dollar premium is higher.
Insurance is generally required under 20% down on an insured product. It protects the lender. Some provinces charge sales tax on the premium in cash at closing even if the premium itself is financed. This page does not price 30-year insured amortizations or portfolio (uninsured) low-ratio deals.
Common questions
Is this paid in cash at closing?
Usually it is added to the loan. Some provinces charge sales tax on the premium that must be paid up front.
Does this include my monthly payment?
No. Use the mortgage payment tool for principal and interest. Add the premium to the loan first if you will finance it.
Why does 5% down cost more than 10%?
Higher loan-to-value is riskier for the insurer, so the percent is higher, and the loan is larger.