What is a key difference in the underwriting guidelines between CMHC and private mortgage default insurers like Sagen or Canada Guaranty?

Question: What is a key difference in the underwriting guidelines between CMHC and private mortgage default insurers like Sagen or Canada Guaranty?

Answer options:

• CMHC exclusively insures fixed-rate mortgages, while private insurers only cover variable-rate mortgages. ✅ Private insurers may offer more flexible guidelines for non-traditional income or credit scenarios compared to CMHC, though often at a higher premium.
• CMHC has stricter maximum purchase price limits than private insurers.
• Private insurers refuse to insure mortgages for self-employed individuals, whereas CMHC offers specific programs for them.

Correct answer: Private insurers may offer more flexible guidelines for non-traditional income or credit scenarios compared to CMHC, though often at a higher premium.

Explanation: While all insurers operate within a similar regulatory framework, private insurers like Sagen and Canada Guaranty sometimes have slightly different or more flexible underwriting guidelines, particularly for unique income structures, credit histories, or property types, which can allow them to insure applications that CMHC might decline, though often with a correspondingly higher premium.