GUIDE
Mortgage Insurance Guide
Mortgage Insurance in Alberta
When you buy a home, there are several types of insurance involved — some required, some optional. Here's what you need to know so there are no surprises at closing.
Understanding these upfront helps you budget accurately and avoid last-minute scrambles before your closing date.
Mortgage Default Insurance (CMHC)
REQUIRED
Required if your down payment is less than 20%. This insurance protects the lender — not you — and the premium is added to your mortgage balance.
Key details
- Applies to purchases with 5%–19.99% down payment
- Premium ranges from 2.8% to 4% of the mortgage amount
- One-time cost added to your mortgage (no monthly bill)
- Provided by CMHC, Sagen, or Canada Guaranty
Example
On a $400,000 home with 5% down ($20,000), the insurance premium would be roughly $15,200 added to your $380,000 mortgage.
Title Insurance
REQUIRED
Protects you and your lender against title defects, fraud, zoning issues, or survey errors discovered after closing.
Key details
- One-time premium paid at closing (typically $200–$500)
- Covers title fraud, encroachments, liens, and unpermitted structures
- Almost always required by your lender
- Provided by companies like FCT or Stewart Title
Example
If a previous owner had an unpermitted addition that triggers a zoning issue, title insurance covers the legal costs and losses.
Homeowner's Insurance (Property Insurance)
REQUIRED
Required by every lender before closing. Covers your home against fire, theft, water damage, and liability.
Key details
- Must be in place before your closing date
- Typical cost: $1,200–$3,000/year depending on property type and location
- Covers the structure, personal belongings, and liability
- Shop around — rates vary significantly between providers
Example
If a fire damages your kitchen, homeowner's insurance covers the repair costs and temporary living expenses while the work is done.
I can connect you with a trusted insurance broker to get this set up quickly before closing.
Mortgage Life Insurance
OPTIONAL
Optional coverage that pays off your mortgage balance if you pass away or become critically ill. Worth considering, but compare your options.
Key details
- Your lender will offer this at signing — but it's not your only option
- Private term life insurance is often cheaper and more flexible
- Lender policies decrease in value as your mortgage shrinks, but premiums stay the same
- Private policies let you name your own beneficiary and keep the payout
Example
A $400,000 lender policy might cost $80/month. A comparable private term policy could cost $30–$50/month with better coverage.
Always compare lender mortgage insurance with a private term life policy before signing.
Have questions about insurance costs?
I'll walk you through what's required for your situation and help you budget for closing — no surprises.
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