What is Mortgage Default Insurance?

Diane Buchanan • September 6, 2016

Mortgage Insurance 101.

As part of the home buying process, you will hear the term mortgage insurance  used a lot, especially if you are applying for a mortgage with a downpayment less than 20% of the purchase price. In Canada there are currently 3 mortgage insurers:

Mortgage default insurance, commonly referred to as mortgage insurance, allows borrowers to achieve home ownership in Canada with as little as 5% down.

Simply put, mortgage insurance is an insurance policy that the bank takes out to protect themselves against your defaulting on the loan. They pass the costs on to you, typically it is added to the mortgage balance and included in your regular payments. Here is some information from each of the mortgage insurers.

From Genworth Canada

Transcript from the video A conventional mortgage in Canada normally requires a down payment of at least 20% of the purchase price. When homebuyers have less than 20% for a down payment, Mortgage Insurance allows them to secure a mortgage for their home purchase. Tailored Mortgage Insurance products from Genworth Canada can help you achieve the dream of homeownership sooner and with as little as 5% down. Saving for a down payment is always a great idea. Trouble is, depending on the area, prices may be rising faster than the savings are building up. And, as values rise, the dream home gets further out of reach. This is where mortgage default insurance – more commonly referred to as “mortgage insurance” – can help…by enabling qualified borrowers to purchase a home with as little as a five per cent down payment. If the right home for you has a purchase price of $300K, then lenders will normally require you to provide a down payment of at least $60K. With Mortgage Insurance, you can secure a mortgage with as little as $15K down. Mortgage insurance is a win-win situation for homebuyers and lenders. Lenders rely on it to protect themselves from financial losses in case a loan is not repaid. Because lenders have this protection, they are able to offer loans with smaller down payments, provided credit and legal requirements are met. For homebuyers, this means access to homeownership sooner at a competitive rate, and with a lower down payment.

From The Canadian Mortgage and Housing Corporation (CMHC)

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment. Here is a pdf with a chart outlining the cost of the insurance premium:

From Canada Guaranty

Consumer tip:  Mortgage insurance is often confused with other types of insurance associated with homeownership. Knowing the difference will help you understand what coverage is appropriate for your specific needs. Mortgage Insurance is not the same as:

  • Homeowner/Property Insurance: A form of property insurance designed to protect the individual’s home (or possessions in the home) against damages, including loss, theft, fire, or other unforeseen disaster.
  • Mortgage Life Insurance: A type of insurance designed specifically to repay any outstanding mortgage debt in the event of homeowner death or long-term disability.

If you have any questions about mortgage insurance, please let me know, I am more than happy to go through this in depth with you!

DIANE BUCHANAN
 Mortgage Broker

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Bank of Canada Holds Rate at 2.25% — September 2, 2026

By Diane Buchanan • September 2, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. While Canada's economic recovery is broadening, a new layer of uncertainty has entered the picture. Here is what happened and what it means for your mortgage.

Going Through a Divorce? Don’t Let Your Credit Take the Hit

By Diane Buchanan • August 26, 2026
Going Through a Divorce? Don’t Let Your Credit Take the Hit Divorce is stressful enough without adding financial fallout to the mix. Between lawyers, paperwork, and emotional strain, it’s easy to overlook how a separation can impact your credit. But your financial future depends on protecting it now—because long after the dust settles, a damaged credit score can linger. Here are a few smart steps to help keep your credit strong and your finances steady as you move forward. 1. Take Control of Joint Debts When it comes to joint debt, both parties are equally responsible—no matter what your divorce agreement says. If your ex misses a payment on an account with your name attached, your credit takes the hit too. Go through all joint credit cards, loans, and lines of credit. Wherever possible: Close joint accounts to stop future shared use. Transfer balances to the person responsible for repayment. Notify lenders in writing of any changes to account ownership. Once everything is updated, pull your credit report after three to six months to confirm all joint accounts have been closed and reporting correctly. Mistakes happen—stay proactive to prevent surprises later. 2. Open Your Own Bank Accounts Separation means financial independence, and that starts with your own banking. Open a new chequing account in your name only and redirect your pay deposits and bill payments there. At the same time, close any joint bank accounts and change passwords on existing online banking and credit profiles. Even in peaceful separations, shared access can cause confusion—or conflict. Protect yourself by ensuring your money and information are secure. 3. Start Building Credit in Your Name If most of your past credit was tied to your spouse’s name, now’s the time to establish your own. Apply for a small personal credit card or secured credit product . Use it sparingly and pay it off in full each month. This helps you build a solid individual credit history, setting the stage for future goals like buying a home, refinancing, or starting fresh financially. 4. Keep an Eye on Your Credit Monitor your credit report regularly for errors or unexpected changes. You can request free reports from both major credit bureaus in Canada— Equifax and TransUnion —once a year. Tracking your credit isn’t just about catching mistakes; it helps you see your progress as you rebuild your financial independence. Final Thoughts Divorce can be emotionally draining, but protecting your credit doesn’t have to be complicated. By taking a few careful steps now—closing joint accounts, building credit in your name, and monitoring your reports—you’ll safeguard your financial health and gain peace of mind as you start your next chapter. If you’d like personalized guidance on managing credit during or after a divorce, reach out anytime. I’d be happy to walk you through your options.