# How does mortgage insurance mitigate risk and support new home buyers?

> Mortgage insurance, offered by CMHC and private insurers, is key for managing risk and enabling homeownership, particularly for buyers with smaller down payments .

Category: Purchasing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/purchasing/how-does-mortgage-insurance-mitigate-risk-and-support-new-home-buyers

## Answer
Mortgage insurance, offered by CMHC and private insurers, is key for managing risk and enabling homeownership, particularly for buyers with smaller down payments . FRFIs must assess mortgage insurers' financial stability and claims payment history.

## Institutional highlights
- Mortgage insurance helps protect lenders if you can't make your mortgage payments.
- Mortgage insurance doesn't replace the need for careful assessment of your ability to repay your mortgage.
- Your lender can use mortgage insurance from either a government agency or a private company.
- Your lender can choose either option, but they need to carefully assess the insurer they use.
- If your mortgage is insured, your lender needs to follow the insurer's rules for things like property value and required information.

## Related guide
- https://ratellow.com/guides/2024-2026-canadian-mortgage-reforms-guide

## Sources
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1
- 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