Mortgage Default Insurance: CMHC, Sagen and Canada Guaranty

Key takeaway

See who default insurance protects, how a premium is calculated, and what to confirm before adding it to a mortgage.

Understand what is being insured

Mortgage default insurance protects the lender if a borrower defaults. It is different from optional mortgage life, disability or critical illness coverage. A purchase with less than 20% down generally requires default insurance, subject to eligibility. FCAC explains the different insurance products.

Canada’s providers include CMHC, Sagen and Canada Guaranty. Ask which insurer and product your lender is using. Do not treat a provider’s name on an estimate as an approval of your application.

Work from the base loan

CMHC publishes premiums by loan-to-value band. For its standard 25-year-or-shorter example at 90% loan-to-value, the premium rate is 3.10%. See CMHC’s premium table.

Consider a $600,000 home with $60,000 down. The base mortgage is $540,000 and the loan-to-value ratio is 90%.

Item	Calculation
Base mortgage	$600,000 − $60,000 = $540,000
Insurance premium	$540,000 × 3.10% = $16,740
Mortgage with financed premium	$540,000 + $16,740 = $556,740

The premium percentage applies to the base mortgage, not to the purchase price. If financed, that premium becomes part of the amount on which mortgage interest is charged. CMHC explains paying or financing the premium.

Keep three kinds of cost separate

Premium: the insurance charge itself. Premium tax: applicable provincial sales tax, which cannot be added to the insured mortgage. Other closing costs: separate legal charges, adjustments and transaction costs. Check CMHC’s premium-tax guidance.

In the example, financing $16,740 does not establish the cash needed for closing. Ask for a statement that puts each cash item on its own line. Do not multiply every closing charge by the insurance rate or assume taxes are already included in the financed premium.

Check the actual product before using a table

Premium schedules can differ with amortization and product. Canada Guaranty, for example, lists separate premiums for amortizations above 25 years. Compare its published product schedule. CMHC’s Home Start requires the purchase price and lending value to be below $1.5 million. Check the current insured-product limit.

Keep the purchase price, down payment, amortization and premium assumption together when comparing scenarios. Changing one field can mean the original premium assumption no longer fits.

Read the quote as a complete transaction

Before accepting a comparison, confirm the base loan, premium amount, financed total, applicable tax and required cash. Record whether the payment shown includes the financed premium. A lower quoted payment is not a fair comparison if one illustration quietly leaves part of the borrowing out.

Try the figures in the residential calculator, then compare the printed synopsis with the lender’s written terms. Default insurance, property insurance and personal protection coverage each answer a different question; keep their names and costs distinct.

Put the figures into a scenario

Use the appropriate assumptions, compare the results and save a summary for your file.

Open the Residential Calculator →

Sources and review

References checked September 22, 2026. Examples are illustrative; confirm the lender, insurer and program requirements for your situation.