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Buying a home is an exciting journey, but it also comes with a maze of mortgage options.
If you’re like most homebuyers, you’re probably searching for ways to secure the best mortgage rates while keeping your monthly payments manageable.
That’s where understanding mortgage types—particularly insurable mortgages—can make a huge difference.
So, what exactly is an insurable mortgage?
Simply put, it’s a mortgage that meets specific criteria, allowing it to be backed by mortgage default insurance, even if you, the borrower, don’t personally pay for it.
This means lenders can offer you lower interest rates while maintaining their financial security.
Unlike insured mortgages—where you’re required to pay for the insurance—an insurable mortgage gives you many of the same benefits without the extra premium.
Sounds like a win-win, right?
Now, who should read this guide?
Whether you’re a first-time homebuyer, a move-up buyer, or someone looking to refinance, understanding insurable mortgages can help you make smarter financial decisions.
If you want to save money on interest, increase your lender options, and confidently navigate the mortgage process, this guide is for you.
Let’s dive in and explore everything you need to know about insurable mortgages in Canada!
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An insurable mortgage is a home loan that meets certain eligibility criteria, making it qualified for mortgage default insurance coverage—even if you, as the borrower, don’t pay for the insurance directly.
This means that while the loan itself can be insured, the lender typically absorbs the cost of that insurance instead of passing it on to you.
To qualify as an insurable mortgage, a loan must adhere to specific rules, including:
With so many mortgage terms floating around, it’s easy to get confused.
Here’s how insurable mortgages compare to insured and uninsured mortgages:
One of the biggest advantages of an insurable mortgage is its lower interest rate than an uninsured mortgage.
Since the lender knows they are protected by mortgage default insurance, they take on less risk, which allows them to offer you a more competitive interest rate.
Over the life of your mortgage, this can add up to thousands of dollars in savings.
With an insurable mortgage, lenders can obtain mortgage default insurance, even if you don’t personally pay for it.
Because of this, more lenders are willing to offer insurable mortgages, increasing market competition.
This means you have a better chance of finding a lender who can offer you a mortgage with favourable terms and lower costs.
The government tightly regulates mortgage insurance to ensure stability in the housing market.
The Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), and Canada Guaranty are the three major mortgage insurers in the country.
Their role is to protect lenders from borrower defaults, but this also allows lenders to provide better mortgage products to borrowers like you.
These institutions help maintain a healthy and competitive mortgage market, ensuring more Canadians can afford homeownership.
Not every mortgage qualifies as insurable. To ensure that your mortgage meets the criteria, you’ll need to consider the following:
To qualify for an insurable mortgage, you generally need a down payment of at least 20% of the home’s purchase price.
However, even with this down payment, your mortgage must still meet other insurability guidelines to benefit from lower rates.
An insurable mortgage must have a maximum amortization period of 25 years.
If you choose an amortization period longer than this, such as 30 or 35 years, your mortgage will fall into the uninsured category, meaning you will lose access to lower interest rates.
Lenders will evaluate your credit score and debt service ratio to determine whether you qualify for an insurable mortgage.
A higher credit score and a lower DSR ratio make you a less risky borrower, increasing your chances of getting approved with a favourable interest rate.
Only owner-occupied, primary residences qualify for insurable mortgages.
If you are buying a rental or investment property, your mortgage will likely be uninsured, meaning you may face higher interest rates and fewer lender options.
Not all lenders offer insurable mortgage rates, so it’s essential to do your research.
Start by comparing different financial institutions, including banks, credit unions, and alternative lenders.
Each has different policies regarding insurable mortgages, and some may offer more competitive interest rates than others.
Take the time to inquire about their qualification requirements and any additional benefits they provide.
A mortgage broker can be a great asset in your mortgage search.
Brokers have access to multiple lenders and can help you find the best insurable mortgage rates available.
They work on your behalf to secure the most favourable terms, potentially saving you thousands in interest over the life of your loan.
On the other hand, working directly with a bank means you’ll only have access to that bank’s mortgage products.
This might still be a good option if you have a strong relationship with your bank and meet their insurable mortgage criteria.
However, you’ll have fewer choices compared to working with a broker.
If the price of your dream home exceeds $1.5 million, your mortgage will automatically be uninsured.
This means higher interest rates and fewer lender options.
If securing an insurable mortgage is your priority, consider properties that meet the insurability criteria to take advantage of lower rates and long-term savings.
The most noticeable difference between insurable and uninsured mortgages is the interest rate.
Since lenders face less risk with insurable mortgages (thanks to default insurance backing), they offer lower interest rates compared to uninsured loans.
Over time, even a fraction of a percentage point can add up to significant savings.
Uninsured mortgages offer more flexible terms, such as longer amortization periods (30+ years) and higher property values.
However, this flexibility comes at a cost—higher interest rates and stricter lender requirements.
Some lenders only deal with insurable mortgages, meaning you might have fewer options if your mortgage doesn’t meet the criteria.
Uninsurable mortgages open doors to more lenders, increasing your chances of approval and better negotiating power.
One of the biggest advantages of an insurable mortgage is the significantly lower interest rates.
Because these mortgages are backed by mortgage default insurance, lenders take on less risk, allowing them to offer better rates.
Since insurable mortgages meet strict government lending guidelines, lenders are often more willing to approve these loans.
If you meet the requirements, you’ll likely have an easier approval process than an uninsured mortgage.
With an insurable mortgage, you can access a wider pool of lenders, including banks, credit unions, and mortgage finance companies.
More options mean better chances of securing the most favourable terms.
Because insurable mortgages come with lower rates and fewer lender restrictions, they’re a smart financial choice in the long run.
You’ll save money on interest and benefit from stable, predictable payments.
Not true! Any homebuyer purchasing a primary residence within the required price range and amortization limits can qualify for an insurable mortgage, regardless of experience.
This is a common misconception.
Insured mortgages require the borrower to pay the default insurance premium (usually with a down payment of less than 20%).
Insurable mortgages, on the other hand, are eligible for insurance but do not require the borrower to pay the premium.
No, they’re not the same.
Mortgage insurance protects lenders in case of borrower default.
An insurable mortgage is simply a mortgage that meets the criteria for lender-backed insurance, resulting in lower rates.
Even if you put down 20% or more, your mortgage must still meet certain requirements to qualify as insurable.
Not every mortgage with a 20% down payment is automatically considered insurable.
Your credit score plays a major role in securing a mortgage with the best possible rates.
Start by paying your bills on time, as missed or late payments can significantly lower your score.
Keep your credit utilization ratio low—aim to use no more than 30% of your available credit.
Regularly check your credit report for errors and dispute any inaccuracies.
If you have old credit accounts, keep them open, as they help build your credit history.
Small, consistent improvements to your credit score can lead to big savings on your mortgage rate.
Lenders assess your debt service ratio (DSR) to determine how much of your income goes toward debt payments.
A high DSR can hurt your chances of securing an insurable mortgage.
To lower your DSR, focus on paying down existing debts before applying for a mortgage.
Avoid taking on new loans or credit lines, especially in the months leading up to your mortgage application.
Increasing your income—whether through a raise, a side gig, or passive income—can also improve your DSR and make you a more attractive borrower.
The mortgage market is competitive, and you should never settle for the first offer you receive.
Compare rates from different lenders, including banks, credit unions, and alternative lenders.
Consider using approvU Mortgage platform to access multiple lenders and negotiate on your behalf.
Pay close attention to the mortgage terms beyond just the interest rate—prepayment privileges, penalties, and portability options can make a huge difference in the long run.
A mortgage is a long-term commitment, so ensure you get the best deal possible.
One of the borrowers’ biggest mistakes is not getting pre-approved before house hunting.
A mortgage pre-approval gives you a realistic budget and makes you a stronger buyer in the eyes of sellers.
Another mistake is making large purchases before closing—buying a car or taking on new credit could disrupt your approval process.
Finally, not understanding the mortgage terms can lead to unexpected fees and limitations.
Always read the fine print and ask questions before signing any mortgage agreement.
If your mortgage no longer meets insurability criteria—for example, if you refinance and extend your amortization beyond 25 years—it will become uninsured.
You could lose access to lower interest rates and fewer lender options.
To avoid this, work with your lender to structure your mortgage in a way that retains its insurable status.
Yes, but with conditions.
If you refinance within the existing insurable guidelines, such as keeping your amortization at 25 years or less, your mortgage may remain insurable.
However, if you increase the loan amount or amortization period, it could transition to an uninsured mortgage, leading to higher rates.
Not all lenders offer insurable mortgage rates.
Some prefer to deal exclusively with uninsured mortgages due to fewer restrictions.
If securing an insurable mortgage is your priority, use the approvU Mortgage platform for these mortgages.
An approvU Mortgage expert can also help you qualify for and approve an uninsured loan.
While CMHC insurance does not directly affect a home’s resale value, it makes mortgage lending more accessible and affordable for buyers.
This can increase buyer demand, particularly for homes that meet insurable criteria, potentially making your home more attractive.
Applying for an insurable mortgage doesn’t have to be overwhelming.
With approvU Mortgage, you can compare rates from top lenders, find the best mortgage options, and get expert guidance.
Our platform simplifies the mortgage journey, helping you make informed financial decisions confidently.
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