Hi everyone,

Here’s a quick guide on mortgage default insurance (CMHC insurance), which is crucial for homebuyers with less than 20% down payment.

Key Points:

1.⁠ ⁠Who Needs It: Homebuyers with a down payment of less than 20%.
2.⁠ ⁠Purpose: Protects the lender if the borrower defaults.
3.⁠ ⁠Premiums: Added to the mortgage and paid off over the mortgage term.
4.⁠ ⁠Rates: Vary based on loan-to-value (LTV) ratio. Higher LTV means higher premiums.

Example Calculation:

Home Price: $500,000
Down Payment (10%): $50,000
Mortgage Amount: $450,000
LTV Ratio: 90%
Premium Rate (3.10% for 90% LTV): $450,000 * 3.10% = $13,950
New Mortgage Amount: $463,950 (if premium is added)

Understanding this helps you prepare for additional costs. Feel free to reach out with questions!