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">Mortgage Insurance

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Also known as mortgage default insurance, this is a form of protection for lenders (and that lender’s investors) in the event that a borrower defaults on his or her payments.

For homebuyers with a down payment of less than 20%, insurance is generally required by law. Default insurance is provided by either CMHC, Genworth or Canada Guaranty.

Mortgage insurers charge a premium for this insurance coverage, which is typically paid by the borrower and added to the mortgage.

CMHC offers a calculator to determine the mortgage insurance premium here.

Among other things, an insured mortgage requires that:

  1. The property be owner-occupied
  2. The mortgage not be a refinance
  3. The amortization be 25 years or less
  4. The borrower have a 600 minimum credit score (680+ for best rates)
  5. The borrower have a gross debt service ratio of 35-39% or less
  6. The borrower have a total debt service ratio of 42-44% or less
  7. The borrower prove he/she can afford a payment at the benchmark posted 5-year fixed rate, as published by the Bank of Canada
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