What Are The 7 Top Mortgage Insurers In Canada?
Purchasing a home is one of the biggest investments most Canadians will make in their lifetime. For many, securing a mortgage is an essential step in realizing their dream of homeownership. However, securing a mortgage can be challenging, especially for those who cannot afford to make a substantial down payment.
This is where mortgage insurance comes in. Mortgage insurance provides lenders with protection in the event that a borrower defaults on their mortgage loan. In Canada, there are several companies that offer mortgage insurance, each with its own set of advantages and disadvantages.
In this blog, we will explore the top 7 mortgage insurers in Canada, including their overview, advantages, and disadvantages, to help you make an informed decision when choosing a mortgage insurer.
Whether you are a first-time homebuyer or an experienced homeowner, understanding the different options available to you can help you secure the financing you need to achieve your homeownership goals.
What Are The 7 Top Mortgage Insurers In Canada?
The top 7 mortgage insurers in Canada are:
Canada Mortgage and Housing Corporation (CMHC)
Genworth Financial
Sagen (formerly Genworth Canada)
Canada Guaranty
National Mortgage Insurance Corporation (NMIC)
AIG United Guaranty
Essent Guaranty
These insurers provide mortgage insurance coverage to borrowers who are unable to put down a sizable down payment, allowing them to purchase a home with as little as 5% down payment. Mortgage insurance protects lenders against default and helps more borrowers qualify for a mortgage.
The Top Mortgage Insurers in Canada
Canada Mortgage and Housing Corporation (CMHC)
Canada Mortgage and Housing Corporation (CMHC) is a Crown corporation established in 1946 to provide housing solutions and mortgage insurance to Canadians. Here is an overview of CMHC and its advantages and disadvantages:
Overview
CMHC is Canada’s largest provider of mortgage loan insurance, insuring over 1.9 million loans as of 2022.
CMHC provides mortgage loan insurance to lenders, which helps borrowers with less than 20% down payment access mortgage financing.
CMHC also offers affordable housing solutions and research and analysis on the housing market in Canada.
CMHC is a federal government agency, and its operations are overseen by the Minister responsible for the Canada Mortgage and Housing Corporation Act.
Advantages and disadvantages
Advantages:
CMHC insurance is widely recognized and accepted by lenders in Canada, which can increase accessibility to mortgage financing for borrowers with less than 20% down payment.
CMHC offers flexible payment options, such as the ability to add the insurance premium to the mortgage amount, which can make it easier for borrowers to manage upfront costs.
CMHC also offers tools and resources to help borrowers make informed decisions about homeownership and mortgage financing.
Disadvantages:
CMHC insurance premiums can be costly, particularly for borrowers with lower down payments. Premiums can range from 0.60% to 4.00% of the mortgage amount, depending on the down payment amount and the length of the mortgage term.
CMHC has tightened its underwriting guidelines in recent years, which has made it more difficult for some borrowers to qualify for mortgage financing.
CMHC is a government agency, and its operations and policies can be subject to political influence and change. This can create uncertainty and unpredictability in the housing market.
Genworth Financial
Genworth Financial is a mortgage insurance company that provides mortgage loan insurance to lenders in Canada. Here is an overview of Genworth Financial and its advantages and disadvantages:
Overview
Genworth Financial is a subsidiary of Genworth MI Canada Inc., a publicly-traded company that has been providing mortgage loan insurance to Canadians since 1995.
Genworth Financial provides mortgage loan insurance to lenders, helping borrowers with less than 20% down payment access mortgage financing.
Genworth Financial also offers products and services that help lenders manage risk and make informed lending decisions.
Genworth Financial is a private company, with operations across Canada.
Advantages and disadvantages
Advantages:
Genworth Financial offers a range of flexible payment options, including the ability to add the insurance premium to the mortgage amount.
Genworth Financial offers affordable mortgage loan insurance premiums that can be lower than those charged by other mortgage insurers in Canada.
Genworth Financial has a strong reputation in the mortgage industry and is widely recognized and accepted by lenders in Canada.
Disadvantages:
Genworth Financial’s underwriting guidelines can be more stringent than those of other mortgage insurers in Canada, making it more difficult for some borrowers to qualify for mortgage financing.
Genworth Financial’s mortgage loan insurance premiums can be more expensive for borrowers with lower credit scores or higher loan-to-value ratios.
Genworth Financial is a private company, and its operations and policies can be subject to market fluctuations and changes in the economic environment.
Canada Guaranty
Canada Guaranty is a mortgage insurance company that provides mortgage loan insurance to lenders in Canada. Here is an overview of Canada Guaranty and its advantages and disadvantages:
Overview
Canada Guaranty was founded in 2010 and is a privately-owned Canadian company.
Canada Guaranty provides mortgage loan insurance to lenders, helping borrowers with less than 20% down payment access mortgage financing.
Canada Guaranty offers a range of products and services that help lenders manage risk and make informed lending decisions.
Canada Guaranty has operations across Canada and is widely accepted by lenders.
Advantages and disadvantages
Advantages:
Canada Guaranty offers affordable mortgage loan insurance premiums that can be lower than those charged by other mortgage insurers in Canada.
Canada Guaranty offers a range of flexible payment options, including the ability to add the insurance premium to the mortgage amount.
Canada Guaranty has a reputation for excellent customer service and responsiveness to the needs of lenders and borrowers.
Disadvantages:
Canada Guaranty’s underwriting guidelines can be more stringent than those of other mortgage insurers in Canada, making it more difficult for some borrowers to qualify for mortgage financing.
Canada Guaranty may have fewer resources than other mortgage insurers, which could affect its ability to respond to changes in the market or economic environment.
Canada Guaranty may not be as well-known or widely accepted by lenders as some of its competitors, which could limit its availability as a mortgage insurance option for some borrowers.
Sagen (formerly Genworth Canada)
Sagen, formerly known as Genworth Canada, is a mortgage insurance company that provides mortgage loan insurance to lenders in Canada. Here is an overview of Sagen and its advantages and disadvantages:
Overview
Sagen has been providing mortgage loan insurance to Canadians since 1995 and is a subsidiary of the publicly-traded company, Sagen MI Canada Inc.
Sagen provides mortgage loan insurance to lenders, helping borrowers with less than 20% down payment access mortgage financing.
Sagen also offers products and services that help lenders manage risk and make informed lending decisions.
Sagen has operations across Canada and is widely recognized and accepted by lenders.
Advantages and disadvantages
Advantages:
Sagen offers flexible payment options, including the ability to add the insurance premium to the mortgage amount.
Sagen has a reputation for excellent customer service and responsiveness to the needs of lenders and borrowers.
Sagen has a wide range of underwriting guidelines, making it easier for borrowers to qualify for mortgage financing.
Disadvantages:
Sagen’s mortgage loan insurance premiums can be more expensive than those charged by other mortgage insurers in Canada.
Sagen’s underwriting guidelines can be more stringent than those of some of its competitors, making it more difficult for some borrowers to qualify for mortgage financing.
Sagen is a private company, and its operations and policies can be subject to market fluctuations and changes in the economic environment.
National Mortgage Insurance Corporation (NMIC)
The National Mortgage Insurance Corporation (NMIC) is a mortgage insurance company that provides private mortgage insurance to lenders in Canada. Here is an overview of NMIC and its advantages and disadvantages:
Overview
NMIC is a private mortgage insurance company that was founded in 2012 and is headquartered in the United States.
NMIC provides private mortgage insurance to lenders in Canada, helping borrowers with less than 20% down payment access mortgage financing.
NMIC has operations in Canada and is recognized and accepted by lenders.
Advantages and disadvantages
Advantages:
NMIC offers private mortgage insurance that can be an alternative to government-backed mortgage insurance.
NMIC’s underwriting guidelines may be more flexible than those of some government-backed mortgage insurers, making it easier for some borrowers to qualify for mortgage financing.
NMIC has a strong financial backing and is rated by major credit rating agencies, providing lenders with confidence in its ability to pay claims.
Disadvantages:
NMIC’s mortgage insurance premiums can be more expensive than those charged by government-backed mortgage insurers in Canada.
NMIC’s private mortgage insurance may not be as well-known or widely accepted by lenders as government-backed mortgage insurance, which could limit its availability as a mortgage insurance option for some borrowers.
NMIC is a private company, and its operations and policies can be subject to market fluctuations and changes in the economic environment.
AIG United Guaranty
AIG United Guaranty is a mortgage insurance company that provides mortgage loan insurance to lenders in Canada. Here is an overview of AIG United Guaranty and its advantages and disadvantages:
Overview
AIG United Guaranty has been providing mortgage loan insurance to Canadians since 1998 and is a subsidiary of American International Group, Inc. (AIG).
AIG United Guaranty provides mortgage loan insurance to lenders, helping borrowers with less than 20% down payment access mortgage financing.
AIG United Guaranty offers a range of products and services that help lenders manage risk and make informed lending decisions.
AIG United Guaranty has operations across Canada and is widely accepted by lenders.
Advantages and disadvantages
Advantages:
AIG United Guaranty offers flexible payment options, including the ability to add the insurance premium to the mortgage amount.
AIG United Guaranty has a reputation for excellent customer service and responsiveness to the needs of lenders and borrowers.
AIG United Guaranty has a wide range of underwriting guidelines, making it easier for borrowers to qualify for mortgage financing.
Disadvantages:
AIG United Guaranty’s mortgage loan insurance premiums can be more expensive than those charged by some other mortgage insurers in Canada.
AIG United Guaranty’s underwriting guidelines can be more stringent than those of some of its competitors, making it more difficult for some borrowers to qualify for mortgage financing.
AIG United Guaranty’s parent company, AIG, has faced financial challenges in the past, which could impact the company’s ability to pay claims in the future.
Essent Guaranty
Essent Guaranty is a mortgage insurance company that provides private mortgage insurance to lenders in Canada. Here is an overview of Essent Guaranty and its advantages and disadvantages:
Overview
Essent Guaranty was founded in 2008 and is headquartered in the United States.
Essent Guaranty provides private mortgage insurance to lenders in Canada, helping borrowers with less than 20% down payment access mortgage financing.
Essent Guaranty’s underwriting guidelines may be more flexible than those of some government-backed mortgage insurers, making it easier for some borrowers to qualify for mortgage financing.
Essent Guaranty has operations in Canada and is recognized and accepted by lenders.
Advantages and disadvantages
Advantages:
Essent Guaranty offers private mortgage insurance that can be an alternative to government-backed mortgage insurance.
Essent Guaranty’s underwriting guidelines may be more flexible than those of some government-backed mortgage insurers, making it easier for some borrowers to qualify for mortgage financing.
Essent Guaranty’s mortgage insurance premiums may be more competitive than those charged by some other mortgage insurers in Canada.
Disadvantages:
Essent Guaranty’s private mortgage insurance may not be as well-known or widely accepted by lenders as government-backed mortgage insurance, which could limit its availability as a mortgage insurance option for some borrowers.
Essent Guaranty is a private company, and its operations and policies can be subject to market fluctuations and changes in the economic environment.
Essent Guaranty’s financial backing and credit rating may not be as strong as those of some government-backed mortgage insurers, which could impact lenders’ confidence in its ability to pay claims.
Comparison of the Top Mortgage Insurers
Mortgage Insurance Premiums
Mortgage insurance premiums are fees that borrowers pay to obtain mortgage insurance. These premiums are paid to the mortgage insurer and are typically added to the borrower’s monthly mortgage payment. Mortgage insurance premiums are required when a borrower has less than 20% down payment and is obtaining a mortgage with a lender in Canada.
There are two types of mortgage insurance premiums in Canada:
Upfront Mortgage Insurance Premium: This is a one-time fee paid at closing and is typically added to the total mortgage amount. The amount of the upfront premium is based on the loan-to-value ratio (LTV) of the mortgage, with higher LTV ratios resulting in higher upfront premiums.
Ongoing Mortgage Insurance Premium: This is a recurring fee paid monthly as part of the borrower’s mortgage payment. The amount of the ongoing premium is based on the outstanding mortgage balance and decreases over time as the borrower pays down the mortgage.
Advantages of Mortgage Insurance Premiums:
Allows borrowers with less than 20% down payment to obtain mortgage financing.
Helps lenders manage risk by providing insurance against borrower default.
Provides an alternative to government-backed mortgage insurance, which may have stricter qualifying criteria.
Disadvantages of Mortgage Insurance Premiums:
Increase the cost of borrowing for borrowers with less than 20% down payment.
Ongoing premiums can add up over time, increasing the overall cost of the mortgage.
Borrowers may be required to pay premiums even if their home equity increases above 20%, depending on the terms of the mortgage insurance policy.
Eligibility Requirements
Eligibility requirements for mortgage insurance in Canada vary depending on the lender and the mortgage insurer. However, there are some general eligibility requirements that borrowers must meet in order to obtain mortgage insurance:
Down Payment: Borrowers must have a down payment of less than 20% of the purchase price or appraised value of the property they are purchasing.
Creditworthiness: Borrowers must have a good credit score and a history of responsible credit use.
Income: Borrowers must have sufficient income to support the mortgage payment and other expenses associated with homeownership.
Property Type: The property being purchased must be a residential property that is intended for owner-occupied use.
Property Value: The purchase price or appraised value of the property must be within the limits set by the mortgage insurer.
In addition to these general eligibility requirements, there may be specific requirements set by the lender and the mortgage insurer. For example, some mortgage insurers may require a home inspection or a minimum credit score for certain types of mortgages.
It’s important for borrowers to carefully review the eligibility requirements for mortgage insurance in Canada before applying for a mortgage. If a borrower does not meet the eligibility requirements, they may need to look for alternative financing options or delay their home purchase until they are able to meet the requirements.
Coverage Limits
Coverage limits for mortgage insurance in Canada are determined by the mortgage insurer and are based on the value of the property being purchased and the amount of the mortgage. Mortgage insurance coverage limits protect the lender in case the borrower defaults on the mortgage.
In Canada, the maximum amount of mortgage insurance coverage is typically 95% of the value of the property being purchased. However, the actual coverage limit may be lower depending on the purchase price or appraised value of the property. For example, if the purchase price or appraised value of the property is lower than the maximum coverage limit, the coverage limit will be based on the lower value.
Mortgage insurance coverage limits also vary depending on the type of mortgage being obtained. For example, some mortgage insurers may have lower coverage limits for mortgages with longer amortization periods or for mortgages with higher loan-to-value ratios.
It’s important for borrowers to understand the coverage limits for mortgage insurance before obtaining a mortgage. If the mortgage amount exceeds the coverage limit, the borrower may be required to obtain additional insurance or put down a larger down payment to meet the requirements of the lender and the mortgage insurer.
Overall, mortgage insurance coverage limits play an important role in protecting lenders and borrowers in case of default. Borrowers should carefully review the coverage limits and other terms of the mortgage insurance policy before obtaining a mortgage.
Service Quality
Service quality is an important factor to consider when selecting a mortgage insurer in Canada. The quality of service provided by a mortgage insurer can impact the borrower’s experience throughout the mortgage process, including the application, underwriting, and claims processes.
When evaluating the service quality of a mortgage insurer, borrowers should consider factors such as:
Customer service: The quality of customer service provided by the mortgage insurer can impact the borrower’s experience during the application and underwriting process. Good customer service includes clear and timely communication, knowledgeable staff, and responsive service.
Claims processing: If the borrower needs to make a claim on their mortgage insurance policy, the quality of the claims process can impact their ability to receive timely and fair compensation. A good mortgage insurer should have a clear and efficient claims process, with clear guidelines and procedures for submitting and processing claims.
Technology: The use of technology can impact the quality of service provided by a mortgage insurer. A good mortgage insurer should have user-friendly online portals, mobile apps, and other tools that make it easy for borrowers to manage their mortgage insurance policies and claims.
Reputation: The reputation of the mortgage insurer in the industry can also provide insight into the quality of service provided. Borrowers can research online reviews and ratings, as well as industry awards and recognition, to evaluate the reputation of a mortgage insurer.
Overall, service quality is an important factor to consider when selecting a mortgage insurer in Canada. Borrowers should evaluate the customer service, claims processing, technology, and reputation of a mortgage insurer before selecting a policy.
Conclusion
In conclusion, Canada’s mortgage insurance industry is dominated by a small group of insurers who provide coverage to borrowers who are unable to put down a sizable down payment. These insurers protect lenders against default and allow borrowers to purchase a home with a smaller down payment.
In this blog, we have highlighted the top 7 mortgage insurers in Canada, including the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial, Sagen, Canada Guaranty, National Mortgage Insurance Corporation (NMIC), AIG United Guaranty, and Essent Guaranty. We have provided an overview of each insurer, as well as the advantages and disadvantages of their policies.
When selecting a mortgage insurer in Canada, borrowers should consider factors such as eligibility requirements, coverage limits, mortgage insurance premiums, and service quality. They should also compare policies and pricing from multiple insurers to find the best coverage for their needs.
Overall, mortgage insurance plays a critical role in Canada’s housing market, allowing more borrowers to achieve the dream of homeownership. By selecting a reputable and reliable mortgage insurer, borrowers can protect their investment and enjoy the many benefits of homeownership.
