Zoocasa
Sold Prices
Mortgage Calculator
Map
Market Insights
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
Zoocasa
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
Home Mortgage News

Mortgage Default Insurance vs. Mortgage Insurance

admin by admin
April 24, 2012
in Mortgage News
Reading Time: 2 mins read
Share
Tweet
Share
0 Shares


A couple of years ago my partner and I found out about a new condo project, that seemed like a great investment, in an “up and coming” central, downtown area. Part of the incentive was that if you were a first-time home buyer and put 5% down, another 5% was thrown in by the builder. We weren’t really ready to think about buying at that time but it did make me realize that there was a lot I didn’t know about mortgages and down payments. For example, is 5% the allowable minimum? And what are the pros and cons of making such a low down payment? Then I learned about mortgage default insurance.

First-time home buyers who make a down payment that is less than 20% must have mortgage default insurance and yes, loans can be up to 95% of the purchase price. Mortgage insurance allows lenders to offer competitive rates and of course, provides those with less cash the opportunity to buy a home. However, the insurance also takes the responsibility of the balance owing off the lender should you not be able to make payments.

There are three companies in Canada that provide such insurance: Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guaranty.

The CMHC is owned by the government and offers mortgage insurance that covers the total balance owing. The CMHC website is a great resource for home buyers and home owners (planning to renovate). The site provides helpful planning calculators and a PDF downloadable list of CMHC approved lenders.

Genworth Financial Canada is the leading private provider of mortgage insurance and guarantees up to 90%. Their site offers helpful info for home buyers, including their A Better Way to Home Ownership Spring 2012 Guide and mortgage calculators.

Canada Guaranty also offers a list of products based on a minimum 5% down payment, however in most cases equity must come from personal finances or can be a gift from a relative but not builder or Realtor incentives.

The cost of the insurance premium is usually included in the mortgage payments, however the total can be paid up front. The amount depends on the percentage of how much the loan covers the cost of the home. Note that in Ontario and Quebec, provincial sales tax is added to the premium but sales tax cannot be added to the loan amount.

Mortgage default insurance differs from mortgage life insurance; an optional insurance that covers the balance in the event of untimely death.

For more information about Mortgages visit the Mortgages 101 fact sheet by the Financial Consumer Agency of Canada (FCAC).

Previous Post

What is my obligation to an agent when there’s no buyers contract?

Next Post

“Mortgage Calculator” top Google search term

admin

admin

Related Posts

A couple talking with a mortgage professional.
Bank of Canada

The First BoC Rate Hold of 2025: What it Means for Market Momentum 

April 16, 2025
A woman looking at her finances with a calculator.
Bank of Canada

Tariff Uncertainty Leads to an Interest Rate Cut from the Bank of Canada 

March 12, 2025
Two small houses on top of a keyboard
Bank of Canada

How the Bank of Canada’s Final Rate Cut of 2024 Could Shape Buyer Sentiment in 2025

December 11, 2024

Blog Search

No Result
View All Result

Newsletter Sign-up

Join a community of 130,000+ subscribers. Don't miss important real estate news, market data, and buying and selling tips.

Recent Articles

Calgary city square in springtime

Canada’s Market Hints at a Mid-Year Revival for 2025: CREA

June 16, 2025
Dad and daughter walking dog

Canadian Cities With the Sharpest Home Price Declines in Spring 2025

June 16, 2025

5 Canadian Cottage Regions That Make the Perfect U.S. Buyer Getaway 

June 15, 2025
A house model placed on tax documents.

Property Worth Less Than You Paid? Here’s What Canadian Homeowners Can Do

June 14, 2025

Featured Listings

5 Canadian Cottage Regions That Make the Perfect U.S. Buyer Getaway 

June 15, 2025

From Skyline Views to Private Escapes: 5 Luxe Calgary Homes for Sale

June 10, 2025

What it Means When a Home is Listed for $1

June 7, 2025

6 Can’t-Miss Victorian Homes for Sale in San Francisco Right Now

June 2, 2025
first-time home buyer programs and rebates

Social Media

250 The Esplanade Suite 408 Toronto, ON M5A 4J5

Stay Connected

  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
No Result
View All Result

Zoocasa © 2007–2022. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.