Canadian lender-protection insurance required on many high-ratio mortgages and sometimes relevant to insurable deals.
Mortgage default insurance is insurance that protects the lender if the borrower defaults on the mortgage. In Canada, it is commonly required when the borrower buys with less than 20% down and the property falls within current insured-mortgage rules.
This insurance is central to Canada’s high-ratio borrowing system. It allows borrowers to purchase with smaller down payments, but it also adds a premium cost and brings the file under insurer eligibility rules.
As of 2026, official consumer guidance says mortgage default insurance is generally required when the down payment is under 20% and the home price is $1.5 million or less. The insurance protects the lender, not the buyer.
The premium is commonly added to the mortgage balance rather than paid entirely in cash. Premium rates vary with the size of the down payment, and CMHC says current premium ranges run from 0.6% to 4.5% of the mortgage amount.
| Insurance type | What it mainly protects |
|---|---|
| Mortgage default insurance | The lender against default loss on an eligible insured mortgage |
| Homeowner insurance | The property and contents against insured physical-loss risks |
| Title insurance | Certain title and registration risks tied to ownership and closing |
| Creditor life or disability insurance | The borrower’s or lender’s exposure under a separate optional coverage product |
A borrower purchases an eligible home with 10% down. The lender arranges mortgage default insurance through an approved insurer. The borrower pays the premium cost, but the lender is the party protected if the mortgage later goes into default.
Mortgage default insurance is not the same as homeowner insurance, title insurance, or creditor life insurance.
Borrowers also often assume the insurer is protecting them from negative outcomes. It is really a lender-risk product that enables high-ratio lending.
Eligibility depends on current federal rules, purchase price, occupancy, amortization, and insurer guidelines. Treatment can also vary by lender and property type.