Insurable vs. Uninsured Mortgages

What Are Insurable and Uninsured Mortgages?

Not all mortgages are insured in the same way—or at all. In Canada, mortgages are often classified as insured, insurable, or uninsured, each with distinct qualifications and implications for rates and lender decisions.

An insured mortgage requires mandatory mortgage loan insurance because the down payment is less than 20%.
An insurable mortgage does not require borrower-paid insurance but still qualifies for default insurance by the lender for risk management purposes.
An uninsured mortgage does not qualify for insurance, typically due to property value, amortization length, or refinancing rules.

At Optimize, we help you understand which category your mortgage falls into and how it affects your available options—not just in terms of approval, but long-term costs and flexibility.

Tip: If you’re aiming for the best possible rate, it helps to know whether your mortgage can be classified as insurable — even if you’re not paying for insurance yourself.

Insured Mortgages: When You Pay for Insurance

An insured mortgage is required when:

Your down payment is less than 20% of the home’s purchase price.
The property value is below insurer-specific thresholds.
The amortization period is 25 years or less.

With an insured mortgage:

You pay the mortgage insurance premium, typically adding it to your loan.
Lenders benefit from reduced default risk, which often allows them to offer more competitive interest rates despite the higher loan-to-value ratio.

For first-time buyers or those with limited down payment funds, insured mortgages provide access to homeownership with manageable terms, despite the added cost of insurance.

Insurable Mortgages: Lender-Backed Insurance, No Premium for You

An insurable mortgage:

Has a down payment of 20% or more.
Falls within qualifying criteria (e.g., purchase price limits, amortization capped at 25 years).
May be insured by the lender, even though you, as the borrower, do not pay the premium.

This allows lenders to access lower funding costs, which can result in better rates for you compared to fully uninsured mortgages. However, not all properties or situations qualify.

At Optimize, we ensure you understand whether your mortgage is eligible for this hidden advantage and how to maximize its benefits.

Uninsured Mortgages: When Insurance Is Not an Option

A mortgage becomes uninsured when it falls outside insurer guidelines, such as:

Properties with a purchase price of $1 million or more.
Refinances that exceed an 80% loan-to-value ratio.
Amortizations longer than 25 years.
Certain types of properties (e.g., non-owner-occupied rentals in some cases).

Without insurance, lenders assume full risk, often resulting in:

Higher interest rates.
Stricter qualification criteria.
Fewer product options and lender choices.

Important: Just because you qualify for an uninsured mortgage doesn’t mean it’s your best option. Understanding the classification can help you structure your loan more strategically — sometimes even with small adjustments to your down payment or term.

Comparing mortgage classifications

Mortgage Type	Down Payment	Insurance Cost Paid By	Typical Rates	Key Requirements
Insured	Less than 20%	Borrower	Lowest	Max $1M value, 25-year amortization
Insurable	20% or more	Lender	Low	Must meet insurer criteria
Uninsured	20% or more	No insurance applied	Higher	High-value homes, extended amortizations

Why This Distinction Affects Rates and Terms

The presence (or absence) of mortgage insurance affects:

Your interest rate: Insured and insurable mortgages typically offer better rates than uninsured.
Lender flexibility: Some lenders only deal with insured or insurable mortgages.
Qualification criteria: Uninsured mortgages may have stricter income and credit requirements.

At Optimize, we ensure you don’t just accept the rate you’re offered. We help you understand why that rate applies and explore strategic ways to improve your position through down payment planning, amortization choices, or lender selection.

Why This Knowledge Matters to You

Knowing the difference between insured, insurable, and uninsured mortgages empowers you to:

Make better decisions about your down payment and borrowing strategy.
Understand why certain rates and terms are offered—or not offered—to you.
Plan proactively to optimize your mortgage structure within your broader financial plan.

With Optimize, this isn’t just technical jargon. We guide you through how these classifications impact your personal situation, ensuring your mortgage strategy supports your long-term financial success.