Mortgage default insurance is a premium that is paid by the borrower to the lender. The premium is added to the principal amount of the loan. It is paid off either all upfront or in installments rolled into your monthly premiums. If a sales tax is applicable, it is paid separately at closing (and not added to your principal amount). The insurance is offered by three mortgage insurers, the largest being the Canada Mortgage and Housing Corporation (CMHC). This helps to improve Canadians’ access to housing. In Canada, the insurance is paid in full when the borrower gets the mortgage. These are common on high-ratio mortgages, a loan that is higher than 80% of the lending value of the property.Mortgage default insurance is not required in Canada if your down payment is at least 20%. It is mandatory if the down payment is under 20%. Currently, it is not available for homes with a purchase price of over $1 million. Watch out! Remember that your home will belong to the lender up until all the money borrowed is paid back in full.