What does putting less than 20% down cost?

Common questions

What is mortgage default insurance?

It protects the lender, not you, against the possibility that you cannot repay. It is required whenever the down payment is less than 20% of the purchase price, and it is what makes lending at a high loan-to-value possible at ordinary rates.

How much is the premium?

It is a percentage of the loan and rises as the down payment falls: roughly 2.8% at 15% to 19.99% down, 3.1% at 10% to 14.99%, and 4.0% below 10%. Amortizing an insured mortgage past 25 years adds a further 0.20%.

Can I add the premium to my mortgage?

Yes, and most buyers do, which spreads it over the life of the loan but means paying interest on it. You can also pay it on closing instead. The calculator shows both, so you can see what the interest costs.

Why is there a separate tax to pay in cash?

Ontario charges 8% retail sales tax on the premium. Unlike the premium itself, that tax cannot be added to the mortgage, so it is always payable in cash on closing. It is one of the costs buyers most often forget.

Can any home be insured?

No. Homes priced at $1.5 million or more cannot be insured at all, so those purchases need at least 20% down. No insurer will write a deal above 95% loan-to-value either.