Insured vs Insurable vs Uninsured: What’s the Real Difference?
Insured means less than 20% down and mandatory default insurance, paid by you. Insurable means 20% or more down, insurance not mandatory, but the file still meets insurer rules so your lender can insure it at its own cost. Uninsured means the file fails an insurer rule outright, no matter the down payment.
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What do insured, insurable, and uninsured actually mean on a mortgage?
Insured, insurable, and uninsured describe who pays for mortgage default insurance and whether a mortgage can carry it at all. Insured means less than 20% down, insurance mandatory, borrower pays. Insurable means 20% or more down, insurer rules still met, a lender may insure it at its own cost. Uninsured means the file fails an insurer rule.
These three words get mixed up constantly, and the confusion is understandable. They sound like they describe a price difference. They actually describe eligibility and who writes the cheque for the premium, nothing more.
Three companies provide mortgage default insurance in Canada: CMHC, Sagen, and Canada Guaranty. All three apply the same federal rules on down payment, purchase price, property type, and amortization. A mortgage either needs their insurance, qualifies for it without needing it, or cannot have it at all.
| Category | Down payment | Meets insurer rules? | Who pays the premium |
|---|---|---|---|
| Insured | Less than 20% | Yes, mandatory | The borrower, usually added to the mortgage |
| Insurable | 20% or more, under $1,500,000 | Yes, but not mandatory | No premium unless the lender insures it in bulk, at its own cost |
| Uninsured | Any amount | No, fails an insurer rule | No premium on this mortgage, by anyone |
The citable fact: insured, insurable, and uninsured describe eligibility for mortgage default insurance and who pays its premium, not a guaranteed difference in the interest rate offered.
What makes a mortgage insured, and who pays for it?
A mortgage is insured when the down payment is less than 20% of the purchase price, which makes it a high-ratio mortgage. Default insurance is then mandatory, not optional, and the borrower pays the premium, which is normally added to the mortgage balance rather than paid in cash.
The federal down payment minimums set the floor: 5% on the first $500,000 of purchase price, 10% on the portion between $500,000 and $1,500,000, and 20% required at $1,500,000 or more, where default insurance stops being available at all. Anything under 20% down on an eligible file is high-ratio and must be insured.
Insured mortgages also carry a minimum credit score requirement of 600 for at least one borrower on the file, set by the insurer rather than by the lender. The amortization is capped too: 25 years standard, extendable to 30 years for first-time buyers and buyers of new construction, at a 0.20% premium surcharge.
The citable fact: an insured mortgage has less than 20% down, must carry default insurance by rule, and the borrower pays the premium, which is usually added to the loan rather than paid up front.
What makes a mortgage insurable without being insured?
A mortgage is insurable when the borrower has 20% or more down, so insurance is not required, but the file still meets every insurer eligibility rule on price, property type, and amortization. Because it still qualifies, the lender has the option to insure it in bulk at the lender’s own expense, not the borrower’s.
Meeting the rules means an owner-occupied property of 1 to 4 units, a purchase price or lending value under $1,500,000, and an amortization within the insured maximum. A conventional 20%-down purchase on a typical home usually clears all three without the borrower doing anything differently.
The borrower on an insurable file never sees a premium line, never deals with an insurer directly, and the decision to bulk-insure the file sits entirely with the lender. That decision is explained in the next section.
The citable fact: an insurable mortgage has 20% or more down and meets every insurer eligibility rule, so a lender can choose to insure it at its own cost even though the borrower is not required to.
What is portfolio or bulk insurance, and why would a lender bother?
Portfolio insurance, also called bulk insurance, is when a lender insures a batch of its own insurable mortgages at its own expense, rather than passing an insurance requirement to the borrower. Only files that already meet insurer eligibility rules on price, property type, and amortization qualify. The borrower never pays a premium and the transaction happens entirely between the lender and the insurer.
This is lender-facing, not borrower-facing. Nothing on your mortgage documents changes because a lender chose to insure your file this way, and most borrowers never learn whether their particular mortgage was bulk-insured.
The specific commercial reasons a given lender buys portfolio insurance on a given file are lender-specific and are not published for borrowers to see. What is confirmed is the mechanism itself: an insurable file qualifies for this treatment precisely because it already clears the same rules as any insurable mortgage.
Most insurable mortgages do get bulk-insured by the lender, and the reason is funding rather than risk. An insured mortgage can be securitised more cheaply, and that cheaper funding is what lets a lender price an insurable file keenly. That is why the category matters to you even when you are not the one paying a premium: it is one of the inputs a lender uses when it prices your mortgage. What it is worth on your file is a live pricing question, not a fixed discount, so see today rates.
The citable fact: portfolio insurance lets a lender insure an eligible, insurable mortgage at its own cost, which is a lender decision the borrower neither requests nor pays for.
What makes a mortgage uninsured, and why?
A mortgage is uninsured when it fails at least one insurer eligibility rule, regardless of the down payment offered. The most common reasons are a purchase price at or above $1,500,000, an amortization longer than the insured maximum, a non-owner-occupied single-unit rental property, and most refinances.
Each reason works independently. A purchase at $1,500,000 or above fails on price alone, because CMHC’s homeowner programme caps eligible value below that figure. A 35-year amortization fails on term alone, because the insured maximum tops out at 30 years, and only for first-time buyers and new construction.
Property type is more nuanced than “rental equals uninsured.” A non-owner-occupied single-unit property is not eligible for mortgage loan insurance at all. A non-owner-occupied property with 2 to 4 units can still be insured under the Small Rental programme, with its own premium bands, covered in the next section.
Refinancing is the reason most buyers do not expect. The conventional refinance ceiling is 80% loan-to-value, with no insurer involved at all. CMHC’s one insured refinance product is restricted to building a secondary suite, caps loan-to-value at 90%, and does not permit equity take-out, so an ordinary cash-out refinance is uninsured by design.
The citable fact: a mortgage is uninsured when it fails an insurer rule on price, amortization, property type, or refinance purpose, and no down payment amount can fix that.
How much does default insurance cost on an insured mortgage?
The premium is a percentage of the mortgage amount, set by loan-to-value, and it rises as the down payment shrinks. On an owner-occupied home it ranges from 0.60% at low loan-to-value up to 4.50% at the highest insured loan-to-value with a non-traditional down payment, and the premium is normally added to the mortgage rather than paid in cash.
CMHC publishes the same bands as Sagen and Canada Guaranty for standard homeowner files. Extending an insured mortgage past 25 years adds a further 0.20% surcharge on top of whichever band applies.
| Loan-to-value | Premium |
|---|---|
| Up to 65% | 0.60% |
| 65.01% to 75% | 1.70% |
| 75.01% to 80% | 2.40% |
| 80.01% to 85% | 2.80% |
| 85.01% to 90% | 3.10% |
| 90.01% to 95% | 4.00% |
| 90.01% to 95%, non-traditional down payment | 4.50% |
| Loan-to-value | Premium |
|---|---|
| Up to 65% | 1.45% |
| 65.01% to 75% | 2.00% |
| 75.01% to 80% | 2.90% |
An illustrative example shows how the bands apply. A $450,000 purchase with 10% down leaves a mortgage amount of $405,000, exactly 90% loan-to-value, which sits in the 85.01% to 90% band at 3.10%.
The citable fact: CMHC default insurance premiums run from 0.60% to 4.50% of the mortgage amount depending on loan-to-value, and the premium is normally added to the mortgage rather than paid in cash.
Show the math: premium on a 90% LTV insured mortgage (illustrative)
Does Ontario charge sales tax on the mortgage insurance premium?
Yes. Ontario, Quebec, and Saskatchewan apply provincial sales tax to the default insurance premium, and that tax cannot be added to the mortgage; it is cash due at closing, on top of the down payment. Alberta charges no provincial sales tax on the premium, so the whole premium is simply added to the loan.
In our files, this is the most commonly misstated figure on this topic, and it matters at closing, not just on paper. CMHC states it directly: the sales tax on the premium cannot be added to the loan amount in the provinces that charge it.
For an Ontario buyer that means the 8% PST on the premium is a real cheque needed at the lawyer’s office, separate from the down payment and separate from legal fees and land transfer tax. An Alberta buyer on the identical file writes no such cheque.
| Item | Ontario | Alberta |
|---|---|---|
| Purchase price | $450,000 | $450,000 |
| Down payment, 10% | $45,000 | $45,000 |
| Base mortgage amount | $405,000 | $405,000 |
| CMHC premium, 3.10% of $405,000, added to the mortgage | $12,555.00 | $12,555.00 |
| Provincial sales tax on the premium | $1,004.40, cash at closing | $0, no PST charged |
Ontario content on this site is published under FSRA Brokerage Licence #13321. Alberta content is published under a brokerage licensed by RECA, which has no equivalent premium sales tax to budget for.
The citable fact: Ontario charges 8% provincial sales tax on the default insurance premium, payable in cash at closing, while Alberta charges no such tax on the premium.
Show the math: Ontario PST on the same premium (illustrative)
Does being insured, insurable, or uninsured change your interest rate?
The insurance category is one of several inputs a lender weighs when pricing a file, alongside credit, income, property type, and the lender’s own funding cost that day. Pekoe does not state that one category is cheaper or more expensive than another, because the relationship is not fixed and changes by lender and by day.
Borrowers often assume insured mortgages are automatically priced lower because the lender carries less risk, or that uninsured mortgages are automatically priced higher. Neither assumption holds consistently across lenders, and stating either as a rule would be describing a pattern that does not reliably exist.
Check today’s live rates at pekoe.ca/rates, updated daily, and talk to a broker about where your specific file lands once price, amortization, property type, and purpose are all known.
The citable fact: insurance category is one input a lender weighs when pricing a mortgage, not a fixed rule that makes any one of insured, insurable, or uninsured consistently cheaper than another.
Can a mortgage move between insured, insurable, and uninsured over its life?
Yes, a mortgage’s category can change at renewal or when the mortgage is replaced, but existing insurance already in place on a term does not disappear simply because equity grows. The category that matters most at any point is the one that applies to whatever new transaction is happening, a purchase, a renewal, or a refinance.
A borrower who bought with less than 20% down stays on an insured mortgage for that original loan even after their equity passes 20%, because the insurance was already purchased for that term. Renewing with the same lender and the same balance does not trigger a new insurer review.
A refinance is where the category most often shifts. Taking out equity moves the new mortgage into the uninsured category outright, since the conventional refinance ceiling of 80% loan-to-value carries no insurer involvement, aside from the narrow secondary-suite product described earlier.
The citable fact: an existing insured mortgage keeps its insurance for the life of that term, but refinancing almost always creates a new, uninsured mortgage regardless of how much equity has built up.
What credit score and amortization apply to an insured mortgage?
Insured mortgages require a minimum credit score of 600 for at least one borrower, set by the insurer rather than the lender. The standard amortization is 25 years, extendable to 30 years only for first-time buyers and buyers of new construction, at a 0.20% premium surcharge.
This is the opposite of what many borrowers expect. Insured mortgages are the more restricted category on amortization, not the more flexible one, because an uninsured mortgage is not bound by any insurer limit at all and can run longer where a lender permits it.
Most prime lenders look for a credit score of 680 or higher for their best pricing, though that is a lender preference layered on top of the insurer’s 600 floor, not an insurer rule itself. Below 600, alternative and private lending options remain available, usually with a disclosed lender or broker fee.
The citable fact: an insured mortgage needs a minimum 600 credit score and is capped at 25 years, or 30 years for first-time buyers and new construction, while an uninsured mortgage carries no insurer-set amortization ceiling at all.
Where else can I read about default insurance and down payments?
These three related pages go deeper on the pieces covered above.
- CMHC mortgage insurance cost, explained in full
- Down payment rules for a rental property
- 30-year amortization in Canada, who qualifies
The full set lives on the Ask a Broker hub.
Frequently asked questions
What’s the difference between an insured, insurable, and uninsured mortgage?
Insured means less than 20% down and mandatory default insurance paid by the borrower. Insurable means 20% or more down, insurance not required, but the file still meets insurer eligibility rules. Uninsured means the file fails at least one insurer rule and cannot carry default insurance at any down payment.
Does an insured mortgage cost more or less than an uninsured one?
Pekoe does not state a pricing pattern between the three categories, because lenders weigh many factors at once and the gap changes by lender and by day. The insurance category is one input among several a lender considers when setting an offer. Check current rates directly rather than assume a fixed relationship.
Can I ask my lender to insure my mortgage if I have 20% or more down?
The decision to buy portfolio insurance on an insurable file sits with the lender, not the borrower. You cannot request it or opt out of it, and lenders do not typically disclose which files they insure this way. Your price, property type, and amortization still need to meet insurer rules for the file to qualify as insurable at all.
What is portfolio or bulk insurance?
Portfolio insurance is when a lender insures a batch of its own insurable mortgages at its own expense, rather than passing an insurance requirement to the borrower. It only applies to files that already meet insurer eligibility rules on price, property type, and amortization. The borrower never sees a premium charge or an insurer’s name on this kind of file.
Why can’t a mortgage over $1,500,000 be insured?
CMHC’s homeowner insurance programme caps eligible purchase price or lending value below $1,500,000. A file at or above that threshold fails insurer eligibility outright and is uninsured regardless of the down payment offered. A purchase at $1,500,000 or more also requires at least 20% down under the federal minimum down payment rules.
Can a rental property mortgage be insured?
A non-owner-occupied single-unit rental property is not eligible for mortgage loan insurance under CMHC rules. A non-owner-occupied property with 2 to 4 units can be insured under the Small Rental programme, with its own premium bands. An owner-occupied property with 1 to 4 units, including a rented suite, falls under the standard homeowner programme.
Can I insure a refinance to pay down debt?
A standard cash-out or equity refinance is not eligible for mortgage default insurance, since the conventional refinance ceiling is 80% loan-to-value with no insurer involved. CMHC’s one insured refinance product is restricted to building a secondary suite, caps loan-to-value at 90%, and does not permit equity take-out. Outside that narrow case, a refinance is an uninsured mortgage.
Does Ontario charge sales tax on the mortgage insurance premium?
Yes. Ontario applies an 8% provincial sales tax to the default insurance premium, and that tax cannot be added to the mortgage, so it is cash due at closing. Alberta charges no provincial sales tax on the premium.
What’s the minimum credit score for an insured mortgage?
Insured mortgages require a minimum credit score of 600 for at least one borrower on the file. Most prime lenders look for 680 or higher for their best pricing, though that is a lender preference rather than an insurer rule. Below 600, alternative and private lending options remain available.
Can an uninsured mortgage have a 30-year amortization?
Yes, an uninsured mortgage is not bound by insurer amortization limits and can run over 30 years depending on the lender. An insured mortgage is capped at 25 years standard, with 30 years available only to first-time buyers and buyers of new construction, at a 0.20% premium surcharge. Insured files are the more restricted category on amortization, not the more flexible one.
Which companies provide mortgage default insurance in Canada?
Three insurers operate in the Canadian market: CMHC, Sagen, and Canada Guaranty. All three apply the same federal eligibility rules on down payment, price, and property type, though specific programme details can differ by insurer.
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