A buyer I worked with in Springdale a few weeks ago came to me frustrated. Not about the price. Not about competing offers. About a stack of documents his lender had sent over, each one describing a different kind of insurance he had never heard of. “I just want to know which ones I have to pay,” he told me. “Because right now it feels like someone’s trying to sell me everything at once.”
He wasn’t wrong. When you buy a home in Ontario, insurance comes at you from four different directions, and the confusing part is that they don’t all work the same way. Some are mandatory. Some are optional. Some get paid at closing. Some cost you nothing upfront at all. If you don’t know which is which, you can walk into closing underprepared — or spend money on something you didn’t actually need.
Let’s go through all four. One of them will cost you cash at closing if you’re not ready for it.
TL;DR: Four types of insurance show up when buying a home in Ontario: mortgage default insurance (required if you put less than 20% down), home insurance (your lender requires it before closing), title insurance (almost always worth it, one-time cost), and mortgage life insurance (optional, and your lender cannot make it a condition of your approval). If you’re not ready for the HST on your CMHC premium, you’ll get a surprise bill on closing day.
1. Mortgage Default Insurance (CMHC Insurance) — Required if You Put Less Than 20% Down
This is the one most first-time buyers have heard of, and the one they misunderstand the most.
If your down payment is less than 20% of the home’s purchase price, you’re required by federal law to carry mortgage default insurance. This insurance protects your lender, not you, in case you stop making payments. But it’s also the reason you’re allowed to buy a home with as little as 5% down in the first place.
The premium is calculated as a percentage of your mortgage. In Ontario, you also pay 13% HST on that premium at closing — and that HST amount cannot be rolled into the mortgage. It comes out of your pocket on closing day, in cash. A lot of buyers miss that part. (Save that detail. It matters when you’re budgeting for closing costs.) For a $700,000 home with 5% down, the CMHC premium runs roughly $26,600 — and the HST on that is around $3,458 due at closing. Check the CMHC mortgage loan insurance page if you want to run your specific numbers.
The premium itself is added to your mortgage, so you don’t feel it as a lump sum — but you do pay interest on it over the life of your loan. Which means the actual cost is higher than the premium alone.
Insured mortgage limit: As of December 2024, the maximum purchase price eligible for CMHC insurance is $1.5 million. First-time buyers and buyers of new builds can qualify for a 30-year amortization on an insured mortgage. Premium rates: 4.00% for less than 10% down, 3.10% for 10%–14.99%, 2.80% for 15%–19.99%. Source: CMHC.
2. Home Insurance (Property Insurance) — Your Lender Will Require It Before Closing
Home insurance is not a government requirement. It’s a lender requirement. Your mortgage lender will not advance funds on closing day until you can show them proof that your home is insured.
What home insurance covers: damage to your home and its contents from fire, theft, weather events, and flooding in some policies. It doesn’t protect your equity. It doesn’t protect your lender from you defaulting. It protects the physical building you’re about to own.
What it costs depends on where you live, the type of home, the replacement cost estimate, and what coverage you choose. In Brampton and Mississauga, premiums have been climbing, largely because severe weather claims — water damage and wind — have gotten more expensive in Ontario. You can comparison shop through licensed brokers. The Financial Services Regulatory Authority of Ontario (FSRAO) governs home insurance in Ontario and maintains a list of licensed insurers if you want to verify who you’re buying from.
One thing worth knowing: if you buy a condo, you still need your own condo insurance. The building’s master policy covers the structure and common areas, but your unit, your belongings, and your liability inside your suite are separate.
3. Title Insurance — One-Time Cost, Usually $200–$500, Almost Always Worth It
Title insurance is the one most buyers forget to ask about, and then are mildly surprised by when the lawyer hands them a quote.
Title insurance protects you and your lender against problems with the property’s ownership history: survey errors, title fraud, undisclosed liens, zoning violations you didn’t know about, or errors in public records. You pay a one-time premium at closing. There are no annual renewals. It stays in place for as long as you own the home.
For most GTA purchases, the cost runs between $200 and $500 depending on the purchase price and the insurer. Your real estate lawyer will typically arrange this as part of closing. It’s not legally required in Ontario, but almost every lender will require it, and independently it’s one of the few insurances I’d tell every buyer to carry without hesitation. Given what title fraud has looked like in the GTA over the last few years, it’s a small cost for serious protection.
“I almost said no because I didn’t understand what it was,” a buyer I worked with in Churchill Meadows told me after closing. “My lawyer explained it in about two minutes and I said, okay, obviously yes.”
4. Mortgage Life Insurance (Offered by Your Lender) — Optional. You Can Say No.
Here’s the one your lender will offer you at the signing table. And here’s the part most first-time buyers don’t know: your lender cannot require you to buy it as a condition of your mortgage approval. According to the Financial Consumer Agency of Canada (FCAC), requiring a customer to buy a product or service in order to get another product is called coercive tied selling, and it’s prohibited for federally regulated lenders. You can read your full rights on the FCAC mortgage rights page.
Mortgage life insurance pays off your mortgage balance if you die. It sounds protective. The problem is that the coverage decreases as you pay down your mortgage, but your premiums stay the same. And the benefit goes to your lender, not your family.
Most independent financial advisors recommend term life insurance instead. With term coverage, your beneficiaries receive a fixed lump sum and can decide what to do with it — pay off the mortgage, cover living costs, or anything else. That flexibility is worth something. The lender’s product doesn’t offer it.
You can decline mortgage life insurance at any step of the process. Declining has no impact on your approval, your rate, or your terms. If you want coverage, compare it independently before you sign anything at the bank.
Not sure which ones apply to your situation? If you’re heading toward a pre-approval or just trying to figure out what your actual closing costs are going to be, I can walk you through the numbers before anything gets confusing at the signing table. Call or text Gaurang at (647) 892-2411.
What This Looks Like for Buyers in Brampton and Mississauga
In Springdale, where that buyer I mentioned was looking, most first-time purchases are in the $700K–$850K range. At those price points with 5% down, you’re looking at CMHC premiums in the $24,000–$30,000 range, with an HST amount at closing between $3,100 and $3,900. That’s not a small number to be caught off-guard by. See our breakdown of closing costs for Ontario first-time buyers if you want the full picture of what’s due on closing day.
In Erin Mills or Churchill Meadows in Mississauga, where newer townhomes push into the $850K–$1.05M range, buyers just above the 20% threshold sometimes skip CMHC insurance entirely. That saves the premium, but means the full down payment is locked up at the start. Whether it makes sense depends on your cash position going into closing.
Home insurance rates in Brampton have ticked up meaningfully over the last two years. Water damage and wind claims have driven premiums higher, and if you’re buying near a flood-prone area — some of the newer builds near Conservation Drive or parts of east Brampton near the valley — it’s worth asking your broker specifically about sewer backup coverage. Not all standard policies include it automatically.
Title insurance is consistent across the GTA. Your lawyer arranges it. Just confirm it’s included when you review your closing cost statement.
Bottom Line
Two of these four insurance types are mandatory in one way or another. Mortgage default insurance is required by federal law when you put less than 20% down. Home insurance is required by your lender before closing. Title insurance is almost universal. Mortgage life insurance is optional, and your lender cannot require it.
The one that catches people off-guard most is the CMHC premium’s HST in Ontario. That’s the one due in cash at closing, and it’s the one most buyers haven’t budgeted for. Know it before you sit down at your lawyer’s table.
If you want to see what a mortgage pre-approval means for your insurance requirements and overall closing picture, that’s usually the best place to start the conversation.
Frequently Asked Questions
Is CMHC insurance the same as home insurance?
No. CMHC mortgage default insurance protects your lender if you stop making mortgage payments, and it’s required when your down payment is under 20%. Home insurance protects the physical property and is required by your lender before closing. They’re two separate products with different purposes.
Can my lender make me buy mortgage life insurance?
No. According to the Financial Consumer Agency of Canada, mortgage life insurance is an optional product. A federally regulated lender cannot require you to buy it as a condition of your mortgage approval. You can decline it at any point in the process without it affecting your rate or approval.
Do I have to pay HST on my CMHC premium in Ontario?
Yes. Ontario buyers pay 13% HST on the CMHC mortgage insurance premium. Unlike the premium itself, which can be rolled into your mortgage, the HST must be paid in cash on closing day. Budget for it separately when you’re estimating your total closing costs.
What does title insurance actually protect me from?
Title insurance covers problems with the property’s ownership history that you might not discover until after closing: title fraud, survey errors, undisclosed liens, zoning violations registered against the property, or errors in public records. You pay a one-time premium at closing, and the coverage lasts for as long as you own the home.
A few weeks ago, that buyer in Springdale came back to me after his lender had walked him through all four insurances. “I just needed someone to tell me which ones were real requirements and which ones were options,” he said. He knew his numbers, he knew what was due at closing, and he made his offer with a clear head. That’s the difference between walking into closing prepared and walking in guessing.
You came into this not sure which insurance was which. You’re leaving with a clear breakdown of all four, what each one does, and what’s actually required. If you want to walk through how this applies to your specific purchase, I’m happy to do that. Call or text me at (647) 892-2411.
Gaurang Shah | Shah Team | Royal LePage Flower City Realty
References
- CMHC. “What Is Mortgage Loan Insurance?” Canada Mortgage and Housing Corporation.
- CMHC. “CMHC Mortgage Loan Insurance Explained.” Canada Mortgage and Housing Corporation, 2025.
- FSRAO. “Property and Other Insurance.” Financial Services Regulatory Authority of Ontario.
- FCAC. “Optional Mortgage Insurance Products.” Financial Consumer Agency of Canada.
- FCAC. “Mortgage Life Insurance: Know Your Rights.” Financial Consumer Agency of Canada.
