March 10, 20263 min read
The simple version is easy; the mortgage-specific details are where the answer becomes valuable. For an eligible home purchase in Canada, a down payment below 20% generally means the mortgage must be insured against default.
How the mortgage math works
Here is what matters most:
- Mortgage default insurance protects the lender, not the borrower.
- The insurance premium is normally added to the mortgage principal, while applicable provincial sales tax on the premium must be paid separately in provinces such as Ontario.
- Insured mortgages must meet insurer rules covering items such as borrower qualification, property eligibility and purchase price.
- Eligible first-time buyers and buyers of new builds can have access to up to 30-year insured amortizations under current federal rules.
Compare the lower upfront down payment with the insurance premium and long-term interest cost before deciding how much to put down.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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