Mortgage Default Insurance

For most people the hardest part of buying a home, especially a first home, is saving the necessary down payment.  If you have less than 20% of the purchase price to put down, you will be required to purchase mortgage insurance through your lender.  Mortgage insurance protects your lender against payment default.

By providing Mortgage Default Insurance to lenders, CMHC and Sagen enable you to finance up to 95% of the purchase price of a home.  This means you can buy a property with as little as 5% down.  So if the cost is $250,000, you would need a down payment of just $15,000!  While you may have to pay an extra premium for their services, these mortgage default insurers have made home ownership possible for millions of Canadians who would otherwise have had to wait much longer in order to save a significant down payment.


Once the following conditions are satisfied, you are eligible for CMHC / Sagen Financial insurance:

  • The home which is to be occupied as your principal residence is located in Canada.
  • Your home-related expenses do not exceed 32% of your gross household income.  This means not more than 32% of your monthly income(s) can be used toward a mortgage payment.
  • Your total monthly debt load does not exceed 40% of your gross monthly household income.   This would include your mortgage payment and all other debts (car loans, credit cards etc…)
  • You are able to verify you have saved the equivalent to at least 1.5% of the purchase price in addition to your 5% down payment.  This is to cover all closing costs, legal fees etc.

The amount of the premium you will pay varies based on the amount of your down payment.

The more you put down, the lower the premium.

To determine actual costs click to see CMHC’s Premiums or Sagen’s Premiums.