CMHC vs. Sagen vs. Canada Guaranty: Which Mortgage Insurer Is Right for You?

If you're a Canadian homebuyer who's put down less than 20% as a down payment on your dream house, you'll need to purchase mortgage default insurance from one of the three approved mortgage insurers: CMHC (Canada Mortgage and Housing Corporation), Sagen, or Canada Guaranty. But not every lender accepts all three, so choosing wisely could save you thousands at closing – after all, why pay more than necessary for something that's a regulatory requirement? In this article, we'll break down the key differences between these three mortgage insurers to help you make an informed decision.

CMHC Insurance: The Most Popular Option

As the oldest and most well-known mortgage insurer in Canada, CMHC has been insuring mortgages since 1997. It's a crown corporation owned by the federal government, which means that any profits are reinvested into supporting housing affordability for Canadians. When it comes to cost, CMHC insurance premiums tend to be slightly higher than those of its competitors.

Sagen Mortgage Insurance: A More Affordable Option

Launched in 2016 as a private mortgage insurer, Sagen has quickly gained popularity among Canadian homebuyers. Its insurance premiums are generally lower than CMHC's, making it an attractive option for those looking to save on their mortgage costs.

Canada Guaranty Insurance: The New Kid on the Block

Launched in 2015, Canada Guaranty is the newest of the three approved mortgage insurers. Its insurance premiums are often comparable to CMHC's, but it has a slightly more streamlined application process.

Insurance Premiums: A Key Comparison

Here's a table comparing the insurance premium rates for each of the three mortgage insurers:

Insurer Eligibility: What Lenders Require

Not all lenders accept all three mortgage insurers, so it's essential to check with your lender before making a decision. Some lenders may only accept CMHC or Sagen insurance, while others might require Canada Guaranty.

Insurer Ratings and Reviews: What Do They Say?

Each of the three mortgage insurers has its strengths and weaknesses, which are reflected in their ratings and reviews from various sources:

• CMHC: A+ (Better Business Bureau), 4.5/5 (Trustpilot)
• Sagen: A- (Better Business Bureau), 4.2/5 (Trustpilot)
• Canada Guaranty: A (Better Business Bureau), 4.1/5 (Trustpilot)

Key Differences: What Sets Each Insurer Apart

Here are some key differences between the three mortgage insurers that might influence your decision:

• Credit Scores: CMHC and Canada Guaranty have stricter credit score requirements (640+), while Sagen allows for lower credit scores.
• Income Requirements: CMHC requires a minimum gross income of $50,000, whereas Sagen has no such requirement. Canada Guaranty's income requirements are more flexible.

Bottom Line: Choosing the Right Mortgage Insurer for You

The choice between CMHC insurance and its competitors ultimately comes down to your individual circumstances. Consider factors like lender eligibility, credit score, income requirements, and premium rates when making a decision.

Remember that while cost savings might be tempting, it's essential to prioritize the most reputable insurer that meets your needs – after all, you want peace of mind knowing that your mortgage is protected in case of default. By doing your research and choosing wisely, you can save thousands at closing and enjoy a stress-free homebuying experience.