These are the 3 insurers that are in Canada.

SAGEN

CMHC

CANADA GUARANTY

These companies let you try and achieve a low down payment of 5%. They are all very similar with similar premiums on the insurance policy that gets attached to your purchase. Remember the tier based costs that are associated at each level of additional down payment. Also these companies not applicable when you put down more than 20% down on your purchase. And refinancing doesn’t fall into this category.

So what are these insurers, and how do these insurers operate in the mortgage industry?

Firstly, they communicate with lenders only – don’t be trying to call them about your decline on your mortgage, as they cannot talk to you about your decline. In certain circumstances the broker could try and call and get info, but the main idea here is that lenders submit info to an insurer for your deal to be approved. The lender is the one who looks at your file, assumes it can be insured with the 3 factors of your approval.

Secondly, these insurers are approving two things.

1. Covenant – this is you. You are the covenant. How well do you pay your bills (credit), how much down (down payment), and how is income? A strong covenant can borrow mortgage money and purchase will little down.
2. Title – this is your house you’re buying, the property they are going to insure. How well does it market? Is there marketability after the fact if you “give back the keys”. Does the property have insurance claims, and other claims against it?

These are just a few examples of the questions asked when approving, but no matter the number of questions they fall into these two categories Covenant and Title.