What it insures
It compensates the lender if the borrower stops paying and the sale of the property does not cover the balance. It does not protect you: it does not cover your payments on job loss, illness, or death. Those risks belong to separate insurance.
When it is mandatory
Whenever the down payment is under twenty percent of the price, on an eligible mortgage. Above a certain property price, the insurance is not offered at all, which makes twenty percent unavoidable.
The three insurers
The Canada Mortgage and Housing Corporation is a Crown corporation; two private insurers offer comparable products. The lender usually picks the insurer; criteria and premiums are close but not identical.
How the premium is paid
It is most often added to the loan amount and repaid over the amortization, with interest. In Quebec, the tax on the premium must be paid in cash at closing and cannot be financed.
The unexpected effect on your rate
Because the loan is insured, the lender’s risk drops, and the rate offered on a high-ratio mortgage is often lower than on a conventional one. A smaller down payment can therefore come with a lower rate — while still costing more in total once the premium is counted.
The question to ask
Comparing “nineteen percent insured” with “twenty percent conventional” means adding up premium, tax, rate, and total cost over the term. That is arithmetic, not instinct: have it done before you fix your down payment.
No rate, price, or recommendation on this page. Amounts and limits change: verify them with official sources before deciding.