mortgages

Navigating Mortgages in Canada: Insured vs. Uninsured Loans

Understand the difference between insured and uninsured mortgages in Canada and how it impacts your homebuying journey.

Richard Walker

16 Aug 2025 — 2 min read

Canadian house split into insured and uninsured sections.

Have you ever found yourself lost in the sea of mortgage terms while trying to buy a home in Canada? Trust me, you're not alone. Whether you're a first-time buyer or considering refinancing, the choice between an insured and uninsured mortgage can be pivotal.

The Basics: What Is an Insured vs. Uninsured Mortgage?

In Canada, an insured mortgage is one where your lender is protected against default by a private mortgage insurance company, like CMHC, Sagen, or Canada Guaranty. Typically, if your down payment is less than 20%, you'll need an insured mortgage.

Conversely, an uninsured mortgage does not require this insurance, often because the buyer can provide a down payment of 20% or more. While this might sound straightforward, the implications for your financial future can be significant.

Key Differences and Considerations

Here's where it gets interesting. You'll face different interest rates, insurance premiums, and even lender flexibility, depending on your choice. Here are a few key points:

Interest Rates: Insured mortgages often have lower interest rates because they pose less risk to lenders.
Insurance Premiums: For insured mortgages, there's an additional cost in the form of insurance premiums, calculated based on your down payment percentage.
Lender Options: More lenders may compete for your business with insured mortgages due to reduced risk.

Consider Bob, an imaginary friend who recently bought a cozy townhouse in Vancouver. With a down payment of 10%, Bob took out an insured mortgage. This allowed him to lock in a low-interest rate, but he had to budget for the added cost of insurance premiums — a worthwhile trade-off for his circumstances.

Cartoon character choosing between insured and uninsured mortgage

When Should You Choose Each Option?

Deciding between insured and uninsured mortgages depends on personal factors like your financial standing, risk tolerance, and long-term goals.

If you're tight on funds but want to enter the market quickly, an insured mortgage can be an excellent stepping stone. For those with a substantial down payment who prefer flexibility and slightly higher rates over additional premium payments, an uninsured mortgage might be the way to go.

Cartoon depiction of a person using a vintage mortgage calculator

It's always a good idea to have a strategic overview of your finances. Grab a coffee, your budget planner, and look over long-term projections. That way, whether insured or uninsured, your mortgage can bring you closer to your dream home, not further from your financial goals.