Insured vs insurable vs uninsured

Every Canadian mortgage falls into one of three buckets, set by how much you put down and what the home costs. An **insured** mortgage is one where you put down less than 20%, so the law requires default insurance, which protects the lender if you stop paying. The minimum down payment is 5% on the first $500,000 of the price and 10% on the portion between $500,000 and $1.5 million. You pay for the insurance through a one-time premium that scales with your down payment: roughly 4.00% of the loan at 5% down, 3.10% at 10%, and 2.80% at 15%. If you take a 30-year amortization, a 0.20% surcharge is added on top, but on an insured mortgage the 30-year option is only open to first-time buyers or buyers of a newly built home. The premium gets added to your mortgage, not paid upfront. Insured mortgages only exist for homes under $1.5 million, and the property has to be owner-occupied.

An **insurable** mortgage is the in-between case: you put down 20% or more, so you are not required to buy insurance, but the deal still fits every rule the insurers demand (home under $1.5 million, amortization 25 years or less, owner-occupied). Here is the part most people never hear: the lender can quietly insure it on the back end (called bulk or portfolio insurance) and pays the premium themselves. You never see a premium, but because the loan is now government-backed and low-risk, the lender often passes you a lower rate. **Uninsured** mortgages are everything that cannot be insured at all: homes over $1.5M, rentals, 30-year amortizations with 20%+ down, refinances. The lender carries the full risk, so these usually come with the highest rates.

Canada has three default insurers: **CMHC** (the federal Crown corporation) plus two private ones, **Sagen** and **Canada Guaranty**. Their premium schedules are effectively identical and set to the same tiers, so which one your lender uses rarely changes your cost. What matters is that the insurance protects the lender, not you, even though you are the one paying the premium on an insured deal.

Now the counterintuitive part. You would expect that paying an insurance premium is pure downside, and that a bigger down payment always wins. On rate, the opposite is often true. Because an insured or insurable mortgage is backed by an insurer, the lender's risk is near zero, so insured mortgages frequently carry the lowest advertised rates in the market. A buyer with 20% down on an insurable deal can sometimes get a better rate than a buyer with 35% down on an uninsurable one, purely because the first loan qualifies for backing and the second does not. More equity does not automatically mean a cheaper rate.