Insured vs. Uninsured Mortgages in Canada: What You Need to Know

When it comes to getting a mortgage in Canada, one key decision is whether your mortgage will be insured or uninsured. While it may not be the most exciting part of the home-buying process, understanding the difference can save you thousands of dollars and impact your mortgage approval.

So, what’s the difference, and which one is right for you? Let’s break it down!

What Is an Insured Mortgage?

An insured mortgage is a mortgage that is backed by mortgage default insurance (also known as CMHC insurance). This insurance protects the lender in case you default on your mortgage.

Who Needs an Insured Mortgage?

Your mortgage must be insured if:

✅ Your down payment is less than 20% of the home’s purchase price.

✅ Your home price is under $1.5 million (homes over $1.5M don’t qualify for mortgage insurance).

✅ You are a First-Time Homebuyer you may qualify for a 30 year amortization, making monthly payments affordable.

Pros of an Insured Mortgage:

✔ Lower Interest Rates – Lenders offer lower rates for insured mortgages because they carry less risk (the insurance protects them).

✔ Easier Approval – If you have a smaller down payment, insurance makes it easier to qualify.

✔ More Accessible for First-Time Buyers – Helps those with lower down payments get into the housing market.

Cons of an Insured Mortgage:

🚨 You Pay for Mortgage Insurance – The cost of CMHC insurance (or private insurer fees) is added to your mortgage balance and PST is paid at closing.

What Is an Uninsured Mortgage?

An uninsured mortgage is a mortgage that does not require mortgage default insurance because the borrower is making a down payment of 20% or more.

Who Gets an Uninsured Mortgage?

Your mortgage is uninsured if:

✅ Your down payment is 20% or more of the home’s purchase price.

✅ Your home price is over $1.5 million (insured mortgages aren’t available for homes above $1.5M).

✅ You can go up to a 30-year amortization making monthly payments lower.

Pros of an Uninsured Mortgage:

✔ No CMHC Insurance Fees – You save thousands by avoiding the added insurance cost.

✔ More Lender Flexibility – Some lenders offer more options for borrowers with uninsured mortgages.

Cons of an Uninsured Mortgage:

🚨 Higher Interest Rates – Because there’s no insurance protecting the lender, rates on uninsured mortgages are often higher than insured ones.

🚨 Stricter Qualification Requirements – Lenders may require higher credit scores, lower debt levels, and more income stability for uninsured mortgages.

CMHC Insurance Costs for Insured Mortgages

If your mortgage is insured, you’ll need to pay a mortgage insurance premium. The amount is calculated based on your down payment percentage:

Down Payment	CMHC Insurance Premium (as % of Mortgage)
5% – 9.99%	4.00%
10% – 14.99%	3.10%
15% – 19.99%	2.80%

📌 Example: If you buy a $500,000 home with a 10% down payment ($50,000), your mortgage is $450,000. The CMHC insurance premium would be 3.10% of $450,000 = $13,950, which gets added to your mortgage.

Is It Worth It? For many first-time buyers, an insured mortgage makes homeownership possible sooner by allowing for a smaller down payment and lower rates.

Which Mortgage Type Is Right for You?

Go for an INSURED Mortgage if:

✔ You have less than 20% down and need a lower rate.

✔ You’re buying a home under $1.5M.

✔ You're a First-Time Homebuyer, you may qualify for a 30-year amortization.

Choose an UNINSURED Mortgage if:

✔ You have a 20%+ down payment and want to avoid insurance costs.

✔ You’re buying a home over $1.5M.

✔ You're eligible for a 30-year amortization.

Final Thoughts: Insured vs. Uninsured—Which One Saves You More?

There’s no one-size-fits-all answer—it depends on your financial situation, home price, and mortgage goals.

💡 If you need help deciding which mortgage type is right for you, let’s chat! I can help you compare your options, crunch the numbers, and find the best strategy for your home purchase or renewal.

📅 Book a Free Consultation Here → Book a consultation online today.

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– Edith Parinas

'The Mortgage Broker ~ The Yogi ~ The Blogger'

Hello@EdithParinas.com