Mortgage default insurance

This is the most misunderstood cost in Canadian home-buying. Default insurance protects the lender, not you — if you stop paying and the home sells for less than the balance, the insurer covers the lender's loss and then pursues you for it. It is not life or job-loss insurance.

The premium scales with how little you put down: roughly 2.8% of the loan at 15–19.99% down, up to 4.0% at 5–9.99% down. It's added to your mortgage and amortized, so a $500,000 mortgage at 5% down carries about $20,000 of premium financed over the life of the loan.

The upside is access and price: insured mortgages let you buy with as little as 5% down and usually carry the lowest rates on the market, because the lender's risk is covered. Whether insured or conventional wins comes down to your down payment and the rate spread — a broker can model both.