What is an Insured Mortgage?

In Canada, an insured mortgage (also called a high-ratio mortgage) is a home loan where the buyer makes a down payment of less than 20% of the purchase price.

Because a smaller down payment means more risk for the lender, Canadian law requires borrowers in this situation to purchase mortgage default insurance.
Important: This insurance protects the lender—not you—if you stop making payments.

How Does Mortgage Insurance Work?

Mortgage insurance in Canada is provided by three main organizations:

CMHC – Canada Mortgage and Housing Corporation (Government)
Sagen – Private insurer
Canada Guaranty – Private insurer

You don’t usually pay the insurance premium upfront. Instead, the cost is added to your mortgage and paid off over time.

Rules For Qualification (2026)

To qualify for an insured mortgage, you must meet federal guidelines:

Minimum Down Payment:
- 5% on the first $500,000
- 10% on any amount above $500,000
Purchase Price Limit:
- The home must cost less than $1 million (unless new 2026 rules change this for high-cost areas).
Maximum Amortization:
- 25 years (uninsured mortgages can go up to 30 years).
Debt Ratios:
- GDSR ≤ 39%, TDSR ≤ 44%.
Stress Test:
- You must qualify at a rate 2% higher than your actual mortgage rate.

Why Do Insured Mortgages Often Have Lower Rates?

It sounds ironic, but insured mortgages usually come with lower interest rates.
Why? Because the lender’s risk is almost zero—the insurer guarantees repayment if you default. Banks reward this security by offering their best promotional rates.

Insured vs. Uninsured Mortgages

Feature

Feature	Insured Mortgage	Uninsured (Conventional)
Down Payment	5% – 19.99%	20% or more
Insurance Cost	Added to your mortgage	$0
Max Amortization	25 years	Up to 30 years
Interest Rate	Typically lower	Typically higher
Max Home Price	Usually <$1 million	No limit

✅ Tip: If you have less than 20% down, an insured mortgage might be your best option for accessing lower rates and buying sooner.