Last updated June 18, 2026 · First-Time Buyers · 4 min read
Mortgage Default Insurance Canada: CMHC, Sagen, and Canada Guaranty Explained
How mortgage default insurance works in Canada. Compare CMHC, Sagen, and Canada Guaranty premiums, when insurance is required, and how it affects your payment.
Quick answer
What this means in practice
Mortgage default insurance - often called CMHC insurance - allows Canadian home buyers to purchase a home with a down payment as low as 5%.
Key takeaways
- Mortgage default insurance is required when your down payment is less than 20% of the purchase price.
- Canada has three mortgage default insurers, all regulated by the federal government under OSFI oversight.
- The premium is calculated as a percentage of the mortgage amount and varies by down payment size.
- The simplest way to avoid mortgage default insurance premium is to save a 20% down payment.
It protects the lender if you default, not you directly.
Understanding how it works, what it costs, and how to minimize it is essential for any buyer putting less than 20% down.
Many first-time buyers misunderstand mortgage default insurance - they think it protects them if they lose their job or cannot make payments.
When is mortgage default insurance required?
Mortgage default insurance is required when your down payment is less than 20% of the purchase price. This applies to homes priced under $1 million. Homes priced at $1 million and above require a minimum 20% down payment and are not eligible for default insurance from any of the three providers. This means buyers of million-dollar homes must have 20% down - there is no insured mortgage option at this price level. If your down payment is 20% or more, you have a conventional mortgage and default insurance is not required - though some lenders may still purchase it to manage risk in certain situations. The premium savings of avoiding default insurance is one of the strongest arguments for saving a larger down payment.
Three insurers in Canada
Canada has three mortgage default insurers, all regulated by the federal government under OSFI oversight. All three offer essentially the same coverage with minor differences in guidelines and pricing: CMHC (Canada Mortgage and Housing Corporation): A federal Crown corporation. The most well-known insurer, insuring about 40-50% of all insured mortgages in Canada. Known for strict property standards and borrower guidelines. CMHC also conducts housing research and sets many of the policy standards that the other insurers follow. Sagen (formerly Genworth Canada): A private insurer regulated by OSFI. Sagen insures roughly 35-40% of insured mortgages. Often considered slightly more flexible than CMHC on certain property types and borrower situations, particularly for condo financing and self-employed borrowers. Canada Guaranty: The smallest of the three, insuring about 10-15% of insured mortgages. Known for competitive premiums and flexible guidelines on certain file types, including non-permanent residents and alternative income documentation. Your lender or broker typically chooses which insurer to use based on your specific situation and the lender's approved partners. You generally cannot choose the insurer yourself, but your broker can select a lender whose preferred insurer best fits your file.
How to avoid paying CMHC insurance
The simplest way to avoid mortgage default insurance premium is to save a 20% down payment. However, for many buyers this takes years - during which home prices may rise faster than savings accumulate. Other strategies include using a gift from immediate family members for the down payment (accepted by most lenders with a signed gift letter), tapping into the Home Buyers' Plan (HBP) from your RRSP to supplement your savings, or buying a less expensive home where you can reach the 20% threshold. The break-even analysis: if saving 20% takes 3 extra years, and home prices rise 5% annually, the price increase on a $700,000 home would be approximately $110,000 - far more than the $26,600 insurance premium you are trying to avoid.