If you put less than 20% down on any home in Canada, you are required to have mortgage insurance. This does not need to paid out of pocket and may be added to your mortgage balance. There are three companies that offer mortgage insurance in Canada: CMHC, Genworth and Canada Guarantee. Each will have different rules and policies. Your lender must acquire an approval from one of the three insurers in order to release funds.
There are some situations where you are still required to have insurance even if you put down a sizeable downpayment. These situations can include self-employment, unique property type, etc
Default Insurance is not for the benefit of the borrower, it is in place for the lender. If you don’t pay your mortgage, the insurance company agrees to pay back the losses to the lender as a result of your default.