Short answer: Lenders price mortgages in three groups. Insured (less than 20% down, you pay the insurance premium) usually gets the lowest rate. Insurable (20% or more down, but it still meets the insurance rules) is close behind, and you pay no premium. Uninsured (refinances, rentals, 30 year amortizations with 20% down, homes $1 million and up with 20% down) has the highest rates. The rates we post are insured rates.
Why it matters
Mortgage default insurance protects the lender, not you, if a borrower stops paying. When a mortgage is insured, the lender’s risk is lower and its funding is cheaper, so the rate is lower. That’s why a buyer with 5% down can sometimes get a better rate than a buyer with 25% down.
The three groups
| Insured | Insurable | Uninsured | |
|---|---|---|---|
| Down payment | Under 20% | 20% or more | 20% or more |
| Who pays insurance | You (added to the mortgage) | The lender, if it chooses to insure | No insurance |
| Purchase price | Under $1.5 million | Under $1 million | Any |
| Amortization | Up to 25 years, or 30 for first time buyers and new builds | Up to 25 years | Usually up to 30 years |
| Refinance allowed | No | No | Yes |
| Rental property | Owner occupied only | Owner occupied only | Yes |
| Typical rate | Lowest | Low | Highest |
High ratio vs conventional
These words describe your down payment:
- High ratio: less than 20% down. Insurance is required, so it’s always insured.
- Conventional: 20% or more down. It’s insurable if it fits the rules above, and uninsured if it doesn’t.
At renewal
If your mortgage was insured when you bought, it stays insured, and you can usually switch lenders at renewal and keep insured pricing. That’s often worth more than people expect. If you’re adding money or refinancing, the mortgage becomes uninsured, so the rate is usually higher. Sometimes a home equity line of credit beside your existing mortgage keeps the better rate on the main balance.
Examples
- First time buyer, $450,000 condo, 5% down: insured. Pays a CMHC premium, gets the lowest rates.
- Move up buyer, $700,000 home, 25% down, 25 year amortization: insurable. No premium, slightly higher rate than insured.
- Same buyer, but wants a 30 year amortization: uninsured. Lower payment, higher rate.
- Homeowner refinancing to consolidate debt: uninsured. Worth comparing against a line of credit first.
Which one are you?
Tell us your price, down payment and plans and we’ll tell you which group you fall into and what that means for your rate. See today’s rates or book a quick call.
Frequently asked questions
What does an insured mortgage rate mean?
It's the rate for a mortgage with less than 20% down, where default insurance from CMHC, Sagen or Canada Guaranty is required. The borrower pays the insurance premium. Because the lender's risk is covered, insured mortgages usually get the lowest rates.
What is an insurable mortgage?
A mortgage with 20% or more down that still meets the insurance rules: a purchase or straight switch, owner occupied, a price under $1 million and an amortization of 25 years or less. The lender can insure it in bulk at its own cost, so you pay no premium and still get a lower rate than uninsured.
What makes a mortgage uninsured?
Anything outside the insurance rules: refinances, amortizations over 25 years with 20% or more down, purchase prices of $1 million or more with 20% or more down, and rental properties. These carry the highest rates because the lender keeps all the risk.
What is the difference between high ratio and conventional?
High ratio means less than 20% down, so insurance is required. Conventional means 20% or more down. A conventional mortgage can be insurable or uninsured, depending on the rules above.
This article is general information, not personal financial advice. Rates, rules and programs change. Talk to a licensed mortgage broker about your situation. Lacroix Mortgage Group is licensed through Mortgage Connection Inc.