Mortgage Default Insurance Calculator

Mortgage default insurance rules

To qualify for mortgage insurance, you have to meet the CMHC’s minimum requirements for down payment amount, credit score and debt levels.

First, it’s important to note that your down payment must be in cash, and can’t come from a loan. There are federal minimum down payment rules depending on the price of the home:

• For homes that cost less than $500,000: the minimum down payment is 5%
• For homes that cost between $500,000 and $999,999: the minimum down payment is 5% of the first $500,000, and 10% of the remaining amount
• For homes that cost $1 million or more: the minimum down payment is 20%. Mortgage insurance isn’t available for homes that cost more than $1 million, so the 20% minimum down payment is a strict requirement

There are a few other rules that test your financial fitness:

• Gross debt service ratio (GDS): GDS is debt divided by annual income. According to CMHC guidelines, household GDS should be less than 39%
• Total debt service ratio (TDS): TDS is debt divided by annual income. Household TDS should be less than 44%
• Credit score: Your credit score must be at least 680
• Amortization: If your down payment is less than 20%, the maximum amortization period for is 25 years

How to pay mortgage default insurance premiums

There are two options for paying your mortgage default insurance:

• Add it to your mortgage: You can add default insurance premiums to the cost of your monthly mortgage payments. When you do this, you’ll pay interest on the premiums
• Pay up front: You can pay your premiums as a lump sum in cash, due on closing day

In certain provinces, you’ll also have to pay provincial sales tax (PST) on your mortgage insurance premiums. In Quebec, it’s called the Quebec sales tax (QST). Unlike the premiums, there isn’t an option to add PST/QST to your mortgage balance. Sales tax must be paid upfront in cash as part of your closing costs.

• Ontario: 8% PST
• Quebec: 9.975% QST
• Saskatchewan: 6% PST