Mortgage default insurance plays a crucial role in facilitating homeownership by reducing the risk for lenders while helping to protect the economy as a whole. Here's an overview of the purpose of mortgage default insurance.

1. Risk Mitigation:
   
   • Mortgage default insurance, often provided by institutions like the Canada Mortgage and Housing Corporation (CMHC), Genworth Canada, or Canada Guaranty, helps mitigate the risk for lenders. It protects them in case the borrower defaults on the mortgage.
2. High Loan-to-Value (LTV) Mortgages:
   
   • Lenders typically require mortgage default insurance when the borrower has a down payment that is less than 20% of the home's purchase price. Mortgages with a high loan-to-value ratio pose a higher risk for lenders, and mortgage default insurance provides a safety net.
3. Facilitating Homeownership:
   
   • Mortgage default insurance enables borrowers to access homeownership with a smaller down payment. Without this insurance, many Canadians might find it challenging to enter the housing market, especially in high-priced real estate markets.
4. Competitive Mortgage Rates:
   
   • By securing mortgage default insurance, lenders can offer more competitive interest rates to borrowers with smaller down payments. This is because the insurance coverage provides a level of protection, allowing lenders to take on the additional risk associated with higher LTV mortgages.
5. Stability in the Housing Market:
   
   • Mortgage default insurance contributes to the overall stability of the housing market by encouraging responsible lending. It allows lenders to extend financing to a broader range of borrowers while maintaining a level of protection against potential financial losses.
6. Regulatory Requirements:
   
   • In certain cases, lenders may be required by regulators to obtain mortgage default insurance for certain types of mortgages. This requirement helps ensure that lending practices adhere to industry standards and guidelines.
7. Premiums and Costs:
   
   • Borrowers typically pay premiums for mortgage default insurance, and these premiums can be added to the mortgage amount or paid upfront. The cost of the insurance is influenced by factors such as the loan amount, down payment percentage, and the insurer's specific premium rates.

The First-Time Home Buyer Incentive (FTHBI) is a program by Canada Mortgage and Housing Corporation (CMHC) that is aimed at helping first-time homebuyers by reducing their monthly mortgage payments.
Here are the key details of the CMHC First-Time Home Buyer Incentive:

1. Eligibility:
   
   • Applicants must be first-time homebuyers, which means they have not owned a home in the last four years.
   • Borrowers must have a down payment of at least 5% for a resale home or 5% or 10% for a newly constructed home.
   • The total household income must be below a certain threshold ($120,000 for most markets)
2. Incentive Structure:
   
   • The CMHC provides a shared equity mortgage with the government. This means that the government contributes a certain percentage towards the purchase price of the home.
   • For resale homes, the government can contribute up to 5% of the purchase price.
   • For newly constructed homes, the government can contribute up to 10% of the purchase price.
3. Repayment:
   
   • The incentive is not an interest-bearing loan, and no ongoing payments are required.
   • The incentive must be repaid after 25 years or when the property is sold, whichever comes first. Repayment is based on the property's fair market value at the time of repayment.
4. Market Value Fluctuation:
   
   • If the home value increases, the repayment amount will be a percentage of the home's appreciated value.
   • If the home value decreases, the repayment amount will be a percentage of the home's current market value.

It's important to note that program details and eligibility criteria may change, and new programs may be introduced after the last program update in January 2022. I recommend reaching out to get the most up-to-date information on the First-Time Home Buyer Incentive or any other government programs that may be available to you.