Understanding Insured Mortgages in Ontario

What is an Insured Mortgage?

An insured mortgage, also known as a high-ratio mortgage, is a type of mortgage where the borrower’s down payment is less than 20% of the home’s purchase price. In such cases, mortgage default insurance is required by law in Canada to protect lenders against mortgage default. The cost of this insurance is typically borne by the borrower and can be paid in a lump sum at the time of purchase or added to the mortgage principal amount. This insurance is a significant aspect of the Canadian mortgage landscape, providing opportunities for a broader range of individuals to enter the housing market. It’s a tool that facilitates homeownership, particularly for first-time buyers who might struggle to save a large down payment.

The Role of Mortgage Default Insurance

Mortgage default insurance plays a crucial role in the Canadian housing market. It allows individuals with less than 20% down payment to purchase homes at preferable interest rates due to the lower risk to the lender provided by the default insurance. This insurance does not protect the borrower; instead, it safeguards the lender in case the borrower fails to repay the mortgage. The ability for both first time and repeat buyers to buy with less than 20% down payment is making insured mortgages even more attractive to potential home buyers.

The Three Mortgage Insurers in Canada

In Canada, there are three providers of mortgage default insurance: the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Financial), and Canada Guaranty. While each provider has its own set of guidelines, they all serve the same fundamental purpose: to provide lenders with protection against mortgage default. These organizations are integral to the functioning of the Canadian housing market, ensuring its stability and accessibility.

How Does Mortgage Insurance Work?

When a borrower applies for a mortgage, the lender assesses the application based on several factors, including the borrower’s credit score, income, and the property’s value. If the down payment is less than 20%, the lender will require mortgage default insurance. The cost of this insurance, known as the premium, is calculated as a percentage of the mortgage amount. The lower the down payment, the higher the insurance premium. This process is standardized across the industry, ensuring consistency and fairness.

The Impact of Insured Mortgages on Home Buyers

While mortgage default insurance adds to the cost of buying a home, it also provides opportunities. It allows potential home buyers with less than a 20% down payment to enter the housing market sooner, with interest rates comparable or even better to those of conventional mortgages. However, it’s essential for borrowers to understand that the premium does not protect them if they default on their payments; it protects the lender. This understanding is crucial in making informed decisions about home financing.

TheBroker.ca Ltd. and Insured Mortgages

At TheBroker.ca Ltd., we understand that navigating the world of insured mortgages can be complex. Our role is to simplify this process for you. We provide clear, unbiased advice to help you understand your options and make informed decisions. Whether you’re a first-time home buyer or looking to refinance, we’re here to guide you through the process of insured mortgages in Ontario. Our commitment is to provide you with the information and guidance you need to make the best decision for your situation.


Insured mortgages are a vital part of the Canadian housing market, enabling many Canadians to achieve their homeownership dreams. By understanding how mortgage insurance works, you can make informed decisions that align with your homeownership goals. At TheBroker.ca Ltd., we’re committed to helping Ontarians navigate the complexities of insured mortgages and make homeownership a reality. We believe in empowering our clients with knowledge, enabling them to make decisions that best suit their needs and circumstances.