Understanding Canadian Mortgage Insurance for Newcomers
In Canada, if your down payment is less than 20%, you’ll need mortgage default insurance. For newcomers, this is actually good news — it opens doors that might otherwise be closed.
What Is Mortgage Insurance?
Mortgage default insurance (from CMHC, Sagen, or Canada Guaranty) protects the lender if you default. You pay the premium — typically 2.8% to 4% of your mortgage amount — but it’s added to your mortgage and paid over time.
Why It Helps Newcomers
- Lower down payment: Insured mortgages allow 5% down (vs. 20% conventional)
- Better rates: Insured mortgages often qualify for lower interest rates
- More lenders: Many lenders only offer insured products to newcomers
- Offset limited credit: The insurance reduces lender risk
The Trade-Off
You’re paying the insurance premium (about $12,000 on a $300,000 mortgage at 4%), but it’s added to your mortgage, so your out-of-pocket stays lower. The interest rate savings often offset a significant portion of the premium cost.
📊 Example
$400,000 home with 5% down:
Down payment: $20,000
Mortgage: $380,000
Insurance premium (~4%): $15,200
Total mortgage: $395,200
Monthly cost of insurance: ~$75 (spread over 25 years)
Elevation Mortgage
Brokerage: Mortgage Connection · Licensed in Alberta and British Columbia
Julie & Andy Jeffery — independent mortgage brokers serving Calgary, Nelson BC,
and clients across Alberta and British Columbia.
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