What it is calculated on
The premium is estimated from the price, your down payment, and the amortization you entered.
Where it lands in your loan
The premium is added to the loan: it raises your balance and your payment for the whole amortization. In Quebec, the tax on the premium is paid in cash at closing.
What still needs confirming
The actual premium rate depends on the program, the insurer, and the file. This figure confirms neither your eligibility nor the insurer’s acceptance.
A worked example
A $500,000 purchase with $25,000 down (5%). The base loan is $475,000, which is 95% of the price. The premium is 4.00% of that loan, so $19,000, added to the amount financed for a total loan of $494,000. Quebec sales tax on the premium, about $1,710 (9%), is not added to the loan: it is paid in cash at closing. With 20% down, the premium is $0.
Common questions
Who pays the insurance premium? The premium protects the lender in case of default, but the borrower pays it, usually by adding it to the loan. Can a loan be insured with less than 5% down? No: above a 95% loan-to-value ratio, the loan is outside the insurance limit for a home purchase, and the premium rises with the ratio.
Next step
Send me the price, the down payment, and the amortization: I’ll confirm the likely premium and what it adds to the payment.