Purchasing a home with less than 20% down means you will need default insurance. This amount is calculated based on your loan-to-value ratio (mortgage loan amount divided by the purchase price).
Typically:
5% or minimum down payment: Premium = 4% of Mortgage amount
10% down payment: Premium = 3.1% of Mortgage amount
15% down payment: Premium = 2.8% of Mortgage amount
20% down payment: Mortgage default insurance usually not mandatory
The insurance premium is typically added to your regular mortgage payment meaning there are no out of pocket expenses. If preferred, the premium can also be paid as a single lump sum.
