Mortgage default insurance

If you plan to buy a home with a down payment of less than 20%, you’ll need to purchase mortgage default insurance. This type of insurance protects lending institutions from the costs they bear if a homeowner defaults on their mortgage. Mortgage default insurance is a requirement enforced by the Government of Canada, and is in effect at all lending institutions nationwide.

When you take out a mortgage with Vancity, we will arrange your purchase of mortgage default insurance at that time.

More info

  • Default insurance must be purchase for a mortgage any time the mortgage totals 80% or more of the total assessed home value
  • Default insurance will be provided through Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada (GE).
  • Default insurance is a one-time cost that you can choose to pay up front or add to your mortgage balance
  • You will be charged any applicable government sales tax on your insurance purchase, and this tax must be paid up front
  • The cost of default insurance is calculated by multiplying the amount of funds borrowed by the default insurance premium, which typically varies depending on your mortgage amount and the size of your down payment
  • Mortgage default insurance is not available for homes with a purchase price of one million dollars or more and/or an amortization (total debt repayment period) of more than 25 years

Energy-efficient home discounts

Choosing an environmentally friendly home can help you reduce your insurance costs. If you plan to buy an energy-efficient home, or renovate an older home to improve its energy efficiency, CMHC may refund 10% of your mortgage default insurance premium. Learn more about CMHC refunds and other potential savings for homeowners who choose to go green.