Insured Mortgage Advantage: Why 5% Down Can Beat 20%

Mortgage insurance helps you buy a home with a smaller down payment.

You can buy a home with as little as 5% down because the insurer covers up to 95% of the home's value.

Your down payment can come from your savings, the sale of a previous property, or a gift from a family member.

If you have good credit, you may be able to use other down payment sources when your down payment is between 5% and 10%, but you can't borrow the money.

The longest you can take to pay off your mortgage is usually 25 years.

Your debt payments can't be more than 39% of your gross income for housing costs, and 44% for total debt.

When lenders check if you can afford your mortgage, they'll use either your mortgage interest rate plus 2%, or 5.25%, whichever is higher.

If you're self-employed, you can still get mortgage insurance if you can prove your income with proper documentation.

You'll generally need a credit score of at least 600 to qualify, but there are other ways to prove you can handle a mortgage if you don't have a credit history.

Lenders must follow careful lending practices to ensure they are managing risk responsibly when approving your mortgage.

Your home must be in Canada, livable year-round, and accessible in all seasons.

You can't buy a home for more than $1,500,000 with mortgage insurance; properties over $1,500,000 require 20% down and are uninsured.

Your lender will carefully check the assessed value of the property to make sure it's accurate.

Your lender might adjust the property's value based on its location and current market conditions when calculating your loan-to-value (LTV) ratio.

You can only borrow up to 65% of your home's value with a Home Equity Line of Credit (HELOC).