The Three Mortgage Default Insurers

In Canada, there are 3 entities that offer Mortgage Default Insurance:

1.      Canada Mortgage and Housing Corporation (CMHC)

2.      Genworth Financial

3.      Canada Guaranty (formerly AIG)

The cost for all of them is the same.  However, they all have slightly different guidelines, depending on what kind of high-ratio mortgage you are obtaining (a few examples: primary residence, rental, refinance, business for self, new immigrant, etc.).  This brings me to an important note:  When you apply for a High-Ratio Mortgage, you must first meet the guidelines set out by the Mortgage Default Insurers.  Only after you have been approved for Mortgage Default Insurance can you move onto the next step, which is to meet the guidelines of the bank.  Banks generally follow the guidelines set out by the Mortgage Default Insurers, although they all offer different mortgage products.  Thus, if you are applying for a High-Ratio Mortgage, the most important thing is for you to do is to qualify for Mortgage Default Insurance.

Guidelines for Mortgage Default Insurance include things such as the maximum amount of money you are able to borrow (determined through what is called a Loan to Value Ratio), the minimum down-payment required, minimum credit scores, and the maximum amount of other debts permitted.

Typically, you do not have to choose which Mortgage Default Insurer to use – your mortgage broker and bank will usually do this for you.  This is because many mortgage brokers, banks and/or underwriters have their own preference of which Mortgage Default Insurer they like to work with, usually due to existing relationships and/or similar rules.