# What role does mortgage insurance play in first-time homeownership?

> Mortgage insurance is a risk mitigator for FRFIs, but it's no substitute for responsible lending.

Category: Financing
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/financing/what-role-does-mortgage-insurance-play-in-first-time-homeownership

## Answer
Mortgage insurance is a risk mitigator for FRFIs (Federally Regulated Financial Institutions), but it's no substitute for responsible lending. CMHC and private mortgage insurers both offer products. It boils down to this:

- Mortgage insurance protects the lender if you default on your loan, not the borrower.
- It's required if your down payment is less than 20% of the home's purchase price.
- The cost (premium) is typically added to your mortgage balance and paid off over time.
- Insurers like CMHC, Sagen, and Canada Guaranty all offer similar products, but your lender chooses the insurer.
- Having mortgage insurance can help first-time buyers qualify for a home with a smaller down payment.

## Institutional highlights
- Your lender needs to make sure your mortgage insurance company is financially stable and reliable.
- Your lender should regularly check that your insurance provider is still a good fit throughout your mortgage.
- You'll need to meet the mortgage insurer's standards for things like property appraisal and paperwork.
- CMHC offers different types of mortgage insurance to help you buy, renovate, or invest in property.
- You might save money on your mortgage insurance if you've used CMHC before and can transfer your existing coverage.
- There is no minimum credit score of 600 required by CMHC; lenders set their own credit score requirements.

## Related guide
- https://ratellow.com/guides/first-time-buyer-rebates

## Sources
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- Page 2 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=2
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0