Mortgage loan insurance protects the lender from default and most Canadian lending institutions are required by law to have it. If the borrower defaults (fails to pay) on the mortgage, the lender is reimbursed by the insurer. The cost for this coverage is in the form of an insurance premium which is often added to the mortgage, or you can choose to pay in a single lump sum at the time of closing. Canada Mortgage and Housing Corporation (CMHC), Sagen Financial and Canada Guarantee are three major providers of this type of insurance in Canada.
Down Payment Requirements: Homes over $500,000
The minimum down payment is 10% for the portion of a house price that exceeds $500,000.
To break this down, the minimum down payment for a $600,000 home would be $35,000. That’s 5% ($25,000) on the first $500,000 and 10% ($10,000) on the next $100,000 in price. The blended down payment in this case would be 5.8%.
Providing guidance, advice and support, every step of the way. We are always available for assistance.
by Eric Ender