Canadian Mortgage Insurance Protects the Lending Company

Home mortgage insurance was first introduced in Canada by Canada Mortgage and Housing Corporation (CMHC) under the National Housing Act in 1971. When a borrower is looking to finance a real estate purchase and wants to put less than 20% down payment into the property, mortgage insurance is typically required.

Mortgage insurance protects the lender against loss in the event that the borrower defaults. The borrower pays the mortgage insurance premium, but the lender receives the protection from the mortgage insurance company. This, in turn, helps the banks make loans with less restrictions to first time or riskier would-be home buyers.

Insurance Premium – Finance Options Available

The amount of a mortgage insurance premium can range between 0.50% and 8.0% depending upon the type of mortgage product or lender used and how much of the purchase price or home value is financed with a mortgage loan. The mortgage insurance premium does not have to be paid up front, and can be added to your mortgage.

Mortgage insurance should not be confused with home insurance or with any kind of mortgage life insurance. In effect, a mortgage insurance company allows a borrower to take out a loan with down payments less than 20% of the value of the home.

Real Estate Ownership in Calgary is Within Reach

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with little or no down payment — with interest rates comparable to those with a 20% down payment.

We would be happy to answer any other questions you may have about mortgage insurance or the wide range of mortgage products we offer.