MORTGAGE DEFAULT INSURANCE (MDI)

Please note that a revised Canadian Armed Forces Relocation Directive (CAFRD) has taken effect as of March 1st, 2025.

This article explains the Mortgage Default Insurance (MDI) benefit and how to process the MDI form for a claim. You can find more details about this benefit in ArƟcle 8.3.10 of the CAFRD.

What is MDI?

MDI, also commonly referred to as Canada Mortgage and Housing Corporation (CMHC), Mortgage Loan Insurance, and CMHC fees, is mandatory in Canada for down payments of less than 20%. MDI protects lenders in the event that a borrower defaults on their mortgage payments.

The MDI form (Mortgage Default Insurance Form.pdf on the Member Secure Website (MSW)) idenƟfies how much you were charged for mortgage default insurance. It also indicates whether or not you put 100% of the equity you made on the sale of your previous residence towards your new residence.

Example: You sold your principal residence and took away $30,000 equity. In order for you to claim MDI from Core you will need to put the entire $30,000 equity as a down payment for your new residence at destination. If you do not use the entire $30,000 equity, MDI will be reimbursed from Custom as long as an MDI premium would have been required had 100% of the equity had been used.

Who is entitled to this benefit?

If you are a relocating CAF Member who is required to pay a mortgage default insurance premium in relation to the purchase of your replacement residence, you may be entitled to receive an amount equal to the assessed insurance premium and to be reimbursed for any administrative fees incurred in relation to the policy of insurance. In some circumstances, the reimbursable amount may be limited by the availability of funds your Custom Account.

How do I receive this benefit?

To receive reimbursement for MDI, you are required to complete the following steps:

1. Get an MDI form completed in full by your financial institution. You are required to submit this form if you are selling your house at your current posting, or if you were homeowner at your previous posting and were prohibited from purchasing (e.g., due to an OUTCAN, Goose Bay, Iqaluit posting). To download the form, login to the MSW and go to Documents > Sirva Uploads Folder.
   Note: If you are a first-home home buyer, you are not required to submit an MDI form. You may simply submit a claim with your Mortgage Commitment Statement and receipt or invoice showing the MDI charge.
2. Make sure that the form is signed both the financial lender and you.
3. Login to the MSW and start a claim. Upload the completed MDI form with your claim. Failure to do so will result in your claim being declined.

MDI Form Definitions

• To: (Financial Institution) where you enter in the Financial Institution’s name that charged you MDI
• From: (CAF Member) where you enter in your first and last name
• Re: (Property Address) where you enter in the property address where you were charged MDI
• Financial Institution Representative: The name of the financial institution representative that completes the information section of the form
• Original mortgage amount ($): The original amount of the mortgage
• Maturity date of mortgage: The last day of a mortgage term
• Interest rate (%): Interest rates can be fixed or variable.
• Principal Outstanding as of this date ($): The current balance of your mortgage

From which funding components is the MDI benefit reimbursed?

Depending on the circumstances, the MDI benefit may be reimbursed as follows:

From the Core Account when:

• You sell your principal residence at origin and use 100% of the equity from the sale towards the purchase of your new residence
• You sold your principal residence at origin prior to being posted to a place of duty where purchasing a residence was prohibited, and now intend to purchase a home at your new place of duty. In this case you may still be eligible for MDI if you put 100% of the equity from the sale of your home at origin toward the purchase of your residence at the new place of duty

From the Custom Account when:

• For either of the conditions under the Core benefit when you use less than 100% of the equity from the sale for the purchase of your new residence, but only when an MDI premium would have been required had 100% of the equity been used
• On the date that you finalize the purchase of your new principal residence, your current principal residence is unsold and is either actively marketed OR is subject to a valid  agreement of purchase and sale, and the finalization of the sale is at a later date
• You are renting your current residence and you are not eligible to receive benefits under the second bullet of the Core benefit OR have not received the Real Estate Incentive in relation to the posting from your last principal residence
• When you are a first-home home buyer

How do I pay my MDI?

MDI may be paid by you as a single lump-sum, or added to the mortgage and amortized over the life of the mortgage. Regardless of which means you elect to pay the MDI, the claimable amount remains the same and is not adjusted for additional mortgage interest.

Tax Implications

Please be advised that while most benefits are non-taxable, some benefits may be. To maximize the after-tax benefits that you are eligible for, please carefully review all information pertaining to taxable
benefits, such as:

• The Tax Implications VIP
• The List of Taxable Benefits

All applicable tax deductions will be withheld from your future pay by the CAF. To obtain your T4 and / or RL-1s, or for any issues and assistance, please contact DRBMRelocationPayBenefits-DGARPrestationsdereinstallation@forces.gc.ca. We recommend that you consult a professional financial planner and / or visit the CRA / MRQ website to find further information about tax implications, as Sirva Relocation Advisors are not tax specialists.

This ReloFact is a general guide, meant for informative purposes only. The CAFRD remains the authority for the reimbursement of relocation expenses and referring to it for eligibility prior to incurring expenses is encouraged.