CMHC, Sagen and Canada Guaranty: Mortgage Default Insurance Explained (2026)

Updated November 1, 2026, with the federal rules and insurer policies in force on that date.

Almost every Canadian buyer with less than 20% down ends up with a mortgage insured by CMHC, Sagen (the former Genworth Canada) or Canada Guaranty. Banks also insure billions of dollars of mortgages that never needed it. This guide explains how mortgage default insurance really works in 2026: what makes a mortgage insurable, the properties that cannot be insured and why, why lenders insure loans with 20% or more down, how insurers underwrite, and what happens in a default in British Columbia.

Who insures Canadian mortgages

Three companies insure residential mortgages in Canada:

What happened to Genworth?

Brookfield agreed in 2019 to buy a controlling stake in Genworth MI Canada, and the sale closed on December 12, 2019. With the change in ownership came a new name: the Genworth Canada brand became Sagen on October 13, 2020, the holding company became Sagen MI Canada Inc. on February 5, 2021, Brookfield bought out the remaining shareholders on April 1, 2021, and the insurer itself became Sagen Mortgage Insurance Company Canada on June 1, 2021. The underwriting rules, premiums and government backing carried over unchanged.

The government guarantee

The insurers pay 100% of a lender's eligible claim. The federal government stands behind them in case an insurer itself fails: fully for CMHC, and for 90% of the loan for Sagen and Canada Guaranty. Under the Protection of Residential Mortgage or Hypothecary Insurance Act, if a private insurer were wound up and could not pay, the Minister of Finance would pay the lender, less a deduction of 10% of the loan's original principal. The private insurers pay the government fees for that backstop.

High-ratio, low-ratio and portfolio insurance

Federally regulated lenders generally cannot lend more than 80% of a home's value without insurance, so any mortgage with less than 20% down must be insured. Insurance on mortgages with 20% or more down is optional, and the lender decides whether to buy it.

Insured mortgages make up about a fifth of the Canadian mortgage market, according to Canada Guaranty's chief executive in March 2026, and bulk insurance has picked up again: CMHC insured 7,109 portfolio units in the first quarter of 2026, up from 747 a year earlier.

What makes a mortgage insurable

The binding rules are federal regulations: the Eligible Mortgage Loan Regulations for the private insurers, and the parallel Insurable Housing Loan Regulations for CMHC. The insurers add their own policies on top. For a high-ratio mortgage on a home you will live in, the rules in late 2026 are:

Who counts as a first-time buyer

For the 30-year option, a first-time buyer is someone who has never bought a home in Canada, or has not lived in a home owned by them or their current spouse or partner in this calendar year or the previous four, or has recently separated (CMHC asks for at least 90 days). A newly built home is one that has never been occupied as a residence, and a presale condo with interim occupancy still counts. At CMHC the 30-year product is called Home Start.

Where the down payment can come from

• Your own money: savings, RRSP withdrawals under the Home Buyers' Plan, an FHSA, or proceeds from selling another property.
• A gift from a relative: accepted by all three insurers with a signed letter confirming it does not have to be repaid.
• Borrowed money: CMHC, Sagen (Borrowed Down Payment) and Canada Guaranty (Flex 95) accept an arm's-length loan or line of credit for one- and two-unit homes at 90.01% to 95% of value, for borrowers with strong credit, at a higher 4.50% premium. The repayments count in your TDS.
• Not a cash-back: a lender's cash-back cannot be counted toward the down payment.

Our mortgage financing guide walks through the stress test and the down payment rules with worked Victoria examples.

Premiums

All three insurers charge the same standard premiums, as a percentage of the loan:

The premium is normally added to the mortgage, so you pay interest on it. There is no provincial sales tax on the premium in British Columbia. If you sell and buy again, a premium credit can apply: at CMHC and Canada Guaranty, 100% of the original premium within six months, 50% within a year and 25% within two years. CMHC and Canada Guaranty also refund 25% of the premium on qualifying energy-efficient homes, and Canada Guaranty lists the BC Energy Step Code as a qualifying certification.

Insured, insurable and uninsurable

When you shop for a mortgage with 20% or more down, you will often see three rate tiers. Since November 30, 2016, a low-ratio mortgage can only be insured, individually or in bulk, if it meets most of the same tests as a high-ratio one:

• It is for a purchase, or to carry over an existing insurable mortgage at renewal or on a switch. Refinances do not qualify.
• The amortization is 25 years or less and is never extended.
• The property is worth less than $1,000,000. This cap was not raised when the high-ratio cap went to $1.5 million.
• A borrower has a credit score of at least 600, and the 39/44 ratios are met at the qualifying rate.
• A single-unit home is owner-occupied. Two- to four-unit rentals can qualify.
• If the lender pools the mortgages, they must go into CMHC-guaranteed securities.

A mortgage that meets these tests is insurable, even if no premium is ever paid, because the lender has the option to insure it later. A mortgage that fails them is uninsurable. Typical uninsurable files include refinances and equity take-outs, homes worth $1 million or more with 20% down, amortizations over 25 years with 20% down, single-unit rentals, the line-of-credit portion of a readvanceable mortgage, and borrowers who fail the ratios at the qualifying rate.

Lenders price the tiers differently because of what insurance does to their costs: insured loans are cheapest to fund, insurable loans keep that option open, and uninsurable loans carry the full default risk, more capital and the federal loan-to-income limits, which apply only to uninsured mortgages. The next sections explain why.

Properties that cannot be insured, and why

Beyond the borrower tests, insurers look hard at the property. The common thread is marketability: if a lender ever has to sell the home, will there be buyers, and can a mortgage be properly registered against it? These are the main exclusions and limits:

Purchases barred by the federal ban on non-Canadian buyers, currently set to run until January 1, 2027, cannot be insured either; see our page on the foreign buyers ban. Each insurer's rules differ in the details, and a property that one declines may be accepted by another, so a good broker matters most on unusual properties.

Why banks insure 20%-down mortgages

If a borrower has 20% or 35% down, why would a bank pay to insure the loan? Three reasons, all about the lender's own balance sheet.

1. Less capital

Banks must hold capital against their loans, scaled by risk. Under OSFI's standardized rules, a CMHC-insured mortgage carries a 0% risk weight, because CMHC's obligations are the government's, and the 90% guarantee lowers the risk weight on a privately insured loan. An uninsured mortgage carries a risk weight of 20% to 70%, depending on its loan-to-value:

The largest banks use their own internal models, so their numbers differ, but the direction is the same: insurance frees up capital.

2. Access to government-backed funding

Every mortgage in an NHA mortgage-backed security must be insured, by CMHC or an approved private insurer, for the life of the pool. CMHC guarantees those securities on behalf of the government, and Canada Mortgage Bonds, issued by the Canada Housing Trust and sold to investors as AAA-rated bonds backed by the full faith and credit of Canada, are funded the same way. For 2026, CMHC can guarantee up to $190 billion a year of NHA MBS and $80 billion a year of Canada Mortgage Bonds. Bulk-insured low-ratio loans that a lender pools must go into these CMHC programs.

3. A ban on insured loans in covered bonds

Since 2012, insured mortgages cannot be used as collateral for covered bonds, the other big source of mortgage funding. So lenders funnel insured loans into NHA MBS and Canada Mortgage Bonds and uninsured loans into covered bonds, which are mostly available to the big banks and capped as a share of assets. Smaller lenders and credit unions without covered bond programs rely on insured mortgages and securitization even more.

The result is cheaper, more reliable funding for insurable mortgages. The federal government has said the purpose of low-ratio insurance is to support access to low-cost mortgage funding and competition among lenders, and lenders pass some of it on as lower rates for insured and insurable files.

How insurers underwrite

Most insured applications are decided in minutes by automated systems. CMHC's emili weighs the borrower, the property, the market and the overall risk, and decides most one- to four-unit files without a full appraisal, using the listing, the assessment and other data; it can still require one. OSFI expects insurers to stay responsible for valuation, avoid relying on a single method, and look harder at riskier loans.

Newcomers have their own programs. CMHC sets no minimum time in Canada for permanent residents or people with work permits, and on February 24, 2026 Sagen dropped its rule that buyers must have arrived within the past five years.

When a borrower defaults

Reporting and workouts

Lenders report every insured loan that is a payment or more behind to the insurer each month, and Sagen requires a formal notice once a loan is more than 90 days in arrears. Before anyone goes to court, the insurers push lenders to fix the problem. CMHC's toolkit includes payment deferrals, special payment arrangements, interest-only periods, adding the arrears to the balance and extending the amortization up to 40 years from the original start. Canada Guaranty has let lenders extend amortizations to as long as 40 years without its approval since November 24, 2022, to bring a struggling borrower's GDS down to 39%. If you are falling behind, call your lender early; these tools are much easier to use before a foreclosure starts.

Foreclosure in British Columbia

BC uses judicial foreclosure, supervised by the BC Supreme Court:

1. Default and demand letter

   Usually after 2 to 3 missed payments

   The lender demands the full balance and sets a deadline to catch up or pay out.

2. Petition

   About 3 months after the first missed payment

   The lender files in Supreme Court and registers a certificate of pending litigation on title. You have 21 days to respond.

3. Order nisi

   About a month after service

   The court confirms the default, sets the amount owing, grants personal judgment against borrowers and guarantors, and sets a redemption period.

4. Redemption period

   Usually six months

   You can pay out or catch up. The court can shorten it if there is little equity or the property is not being kept up.

5. Conduct of sale and court approval

   After the redemption period

   The home is listed, usually on the MLS. The court approves the sale if it is provident, and competing bids can be made at the hearing.

6. Distribution and shortfall

   Roughly 9 to 12 months or more in total

   Property taxes come first, then the mortgages in order of priority. Any shortfall remains owing under the personal judgment.

A lender can instead ask for an order absolute and take the property, but under BC's Property Law Act that ends its right to a personal judgment, which is why lenders and insurers almost always prefer a court-ordered sale. Our guide to buying a foreclosure in Victoria covers the process from the buyer's side.

The insurance claim, and the borrower's shortfall

After the sale, the lender claims the unpaid balance, interest and selling costs from the insurer, less the net sale proceeds. In Sagen's own example, a $447,000 gross claim less $358,000 of net proceeds left an $89,000 net claim. Coverage can be cut if the lender broke the policy rules, for example by misrepresenting the file.

The debt does not disappear when the insurer pays. Sagen says it generally seeks a legally enforceable judgment against the borrower for its loss and collects through payment plans or garnishment; this recourse is not available in Saskatchewan or, for some loans, in Alberta, but it is in British Columbia. A judgment and the missed payments stay on a credit report for about six years, and Sagen treats any past loss on a mortgage as disqualifying for new insurance.

What it means in Greater Victoria

We checked every house, condo and townhome listed for sale in Greater Victoria's 13 municipalities on November 1, 2026 against the $1.5 million cap. 38% of houses (393 of 1,044) asked $1.5 million or more and cannot be bought with less than 20% down. Only 2% of condos (20 of 882) and 6% of townhomes (26 of 422) were above it, and 19% of all homes overall.

• Typical condos and houses are still insurable. At VREB's September 2026 benchmarks, the minimum down payment on a $547,800 core condo is $29,780, and on a $1,280,100 core house it is $103,010, both with insured mortgages.
• Oak Bay and North Saanich are mostly 20%-down markets. Most houses there are above the cap, so first-time buyers usually look at townhomes and condos, or at houses in Langford, Colwood, Esquimalt, Sooke and View Royal.
• Move-up buyers between $1 million and $1.5 million fall into the gap: with 20% or more down, the mortgage is uninsurable and may price higher than a buyer with 10% down would pay.
• Leasehold condos. Some older Victoria buildings are leasehold. Check the years left on the lease against your amortization before you write an offer.
• Manufactured homes. There were 59 manufactured homes listed in Greater Victoria, with a median asking price of about $324,900, mostly in Central Saanich (23) and Sooke (19), with the rest in Langford and View Royal. A home on a rented pad in a park is financed as a chattel rather than a mortgage, and some parks sit on leased land, so ask how the land is held before you count on insured financing. See the manufactured homes market report.
• Acreages and farms. In Metchosin, the Highlands, North Saanich and Central Saanich, large lots and land in the Agricultural Land Reserve can run into the insurers' acreage and outbuilding limits.
• Adding a suite. The insured secondary-suite refinance fits BC's 2024 small-scale multi-unit housing rules: owners can borrow up to 90% of the as-improved value to add legal suites. See our guide to secondary suites and zoning.
• Island cottages. A Gulf Islands cottage on a ferry route may suit CMHC's second-home rules, while Canada Guaranty excludes islands without a bridge and Sagen's seasonal program needs 10% down and a 680 score.

What changed, and what is proposed

• December 15, 2024: the price cap rose to $1.5 million, and 30-year amortizations opened to all first-time buyers and buyers of new builds.
• December 16, 2024: borrowers with low-ratio insured mortgages can switch lenders at renewal without the stress test, if they keep the same schedule and take no equity out.
• January 15, 2025: the insured refinance for secondary suites began.
• February 27, 2025: these changes, and the insured stress test, were written into the federal regulations.
• February 24, 2026: Sagen dropped its five-year arrival limit for newcomers and its mandatory full appraisal on non-arm's-length purchases.
• May 7, 2026: CMHC expanded its Prefab Plus program for factory-built homes.
• Proposed in April 2026: letting the private insurers cover five- to eight-unit buildings and giving insurers more flexibility on new triplexes and fourplexes. These were still proposals at the end of September 2026.

Premiums, the 39/44 ratios, the qualifying rate, the 600 credit score and the $1 million, 25-year limits on low-ratio insurance have not changed.

Questions buyers ask

Photo from Wikimedia Commons, used under the licence linked in the caption.