Mortgage default insurance: what the premium buys and what it costs
Doorvia Guides · August 23, 2026
With less than twenty per cent down, insurance protects the lender - and the premium is usually added to your mortgage.
If you put down less than 20 per cent, your mortgage must be insured against default. The insurance protects the lender, not you, but it is what makes low-down-payment lending possible at competitive rates.
The premium is a percentage of the loan and rises as your down payment shrinks. It is normally added to the mortgage balance rather than paid in cash, although in Ontario the provincial sales tax on the premium must be paid at closing.
Insured mortgages come with rules: a price ceiling, occupancy requirements and limits on amortization. In exchange, insured borrowers often see lower interest rates than uninsured borrowers with exactly 20 per cent down.
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