Insured or uninsured mortgage
Default insurance is there because the down payment is under 20%. The borrower pays the premium. The lender's loss is covered if you default, which is why insured rates are often lower than uninsured rates on a similar term. The premium is the cost of that lower rate. It is usually added to the mortgage. Provincial sales tax on the premium, where a province charges it, is generally paid in cash and not added to the loan.
Down payment bands
CMHC's purchase program sets the equity bands for a 1 to 2 unit owner-occupied home, and the price must be below $1,500,000. The insured price cap moved from $1 million to $1.5 million on December 15, 2024.
| Purchase price | Minimum down payment |
|---|---|
| $500,000 or less | 5% of the price |
| Over $500,000 and under $1,500,000 | 5% of the first $500,000 plus 10% of the rest |
| $1,500,000 or more | 20%. Default insurance is not available at that price |
CMHC's own example is a $760,000 home. Twenty percent down is $152,000. The insured minimum is 5% of $500,000 plus 10% of $260,000, which is $25,000 plus $26,000, or $51,000. That is $101,000 less cash. The insurance premium sits on top of the $709,000 mortgage. A $900,000 home needs $65,000 down at the minimum: $25,000 plus 10% of $400,000.
Amortization
The standard insured maximum is 25 years. First-time buyers and buyers of a newly built home can go to 30 years under the Home Start rules, with a premium surcharge. A longer amortization lowers the payment and raises the interest paid if you never prepay.
Why the thread splits in two
| Post | Status the writer gave | Rate |
|---|---|---|
| Beem credit union, British Columbia, October 7 | Insured, plus $2,000 cash back | 3.99% for 3 years |
| Toronto purchase, October 7 | Insured pre-approval | 4.24% for 3 years |
| TD renewal letter, October 9 | Not stated. Balance described near $982,000 | 4.54% for 3 years |
| TD initial renewal, Toronto, October 4 | Uninsured | 4.81% for 3 years |
| GTA refinance, October 3 | Uninsured, 30-year amortization | 3.99% for 3 years |
The 3.99% insured rate and the 3.99% uninsured refinance are the same digits and different products. Cash back, a 30-year amortization, and a penalty the current lender agreed to waive all change the deal. When you compare, match insured with insured and match the amortization.
A renewal of a mortgage that is already insured does not mean you pay a new premium if you stay inside the insurance rules. A refinance that takes new money often comes out of the insured bucket. That is a common reason a refinance rate is higher than a straight switch. The renewal guide covers the shopping window. If you are under 20% equity or buying with the minimum down, say so when you request cheaper rates.