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ADDED TO THE LOAN
Default insurance on a Canadian mortgage.
If the down payment is under 20% and the price is at or under $1.5 million, the premium is part of the amount you borrow. It is not a fee you pay at the lawyer’s out of the down payment, unless you choose to.
| Down payment | Premium on the loan |
|---|---|
| 5% to under 10% | 4.00% |
| 10% to under 15% | 3.10% |
| 15% to under 20% | 2.80% |
| 20% or more | None in this model |
A $600,000 home with $60,000 down is a $540,000 base loan and a 10% down payment, so the premium rate is 3.10%. That is $16,740 added to the mortgage. You pay interest on the premium for the whole amortization. The stress test calculator includes it before it computes the payment and the qualifying rate.
These are the standard CMHC-style bands. A lender or insurer can differ, and the premium is taxable in some provinces on top. The page does not add provincial sales tax on the premium. Homes over $1.5 million are treated as uninsured because the minimum down payment is already 20%.
Questions
Can I pay the premium in cash instead of adding it?
Yes. Adding it to the loan is the default in this calculator because that is what most borrowers do.
Does insurance change the contract rate?
No. It changes the principal. The rate you were offered is a separate input.