Insured vs. uninsured underwriting: the rules that change at 20% down.

Mortgage default insurance is required whenever the down payment is below 20% of the purchase price — a purchase with 20% or more down can be, but doesn't have to be, underwritten as an uninsured mortgage. Effective December 15, 2024, insured mortgages are also capped at a purchase price of $1.5 million, up from the $1 million ceiling that had stood since 2012, per the Department of Finance's technical guidance.

A purchase priced above $1.5 million cannot be insured regardless of down payment size, and requires an uninsured mortgage with at least 20% down. See our stress test working reference for how the qualifying rate applies on both sides of this line.

Three private and Crown insurers write mortgage default insurance in Canada: CMHC (Crown corporation), Sagen (formerly Genworth Canada), and Canada Guaranty. Whichever one is involved on a given file reviews the deal alongside the lender — assessing the same credit, income, and property factors the lender does, against the insurer's own program rules, before the insurance is issued.

The insurer's review runs in parallel with the lender's, not instead of it. Both have to be satisfied before an insured deal funds, which is one reason insured files can carry a second layer of conditions that an uninsured file doesn't.

Two changes took effect December 15, 2024, described by the federal government as among the boldest mortgage reforms in decades: the insured price cap rose from $1 million to $1.5 million, and 30-year amortizations became available to all first-time homebuyers and all buyers of new-construction homes, not just first-time buyers of new builds as under the prior, narrower rule.

Both changes are aimed squarely at affordability — a higher cap lets more Canadians in higher-priced markets qualify with under 20% down, and the longer amortization lowers the monthly payment, though it increases the total interest paid over the life of the mortgage. Neither change altered the insured ratio ceilings or the requirement for default insurance below 20% down — those rules stayed exactly where they were.

Insured mortgages are capped at a maximum GDS of 39% and TDS of 44%, with amortization standard at 25 years, extended to 30 years for the specific first-time-buyer and new-build cases described above. Uninsured lenders set their own ratio ceilings — generally in a broadly similar range, though with more institution-by-institution flexibility — and commonly permit longer amortizations as a matter of lender policy rather than insurer rule.

For the full mechanics of the ratio math itself, our companion piece walks through three Canadian files run by hand, insured and uninsured alike.

On an insured file, the lender's underwriter and the insurer both review the deal, and both have to sign off before it funds — the insurer effectively adds a second, independent set of eyes on credit, income, and property. On an uninsured file, the lender's underwriter is the only reviewer; there's no insurer in the loop, and the lender bears the full default risk itself, which is part of why uninsured underwriting can be more flexible on a case-by-case basis.

Neither structure changes who makes the final call: it's always the lender (jointly with the insurer, on insured deals) — never the broker or agent arranging the mortgage, whatever their provincial licence title. See how mortgage underwriting works in Canada for the full pipeline both file types move through.

For a borrower near the 20% line, the choice isn't always obvious: taking an insured route at just under 20% down can mean a tighter ratio ceiling and an insurance premium, but sometimes a more accessible qualifying path than an uninsured lender's own criteria would allow. For a borrower well above 20% down or above the $1.5 million cap, the uninsured route is the only option, and ratio flexibility becomes a lender-selection question rather than an insurer one.

Getting the down payment documentation right matters on either path — see the Down Payment Gift Letter Guide for the paper trail insurers and lenders both expect. If you want a second set of eyes checking which path fits a specific file before submission, that's the kind of pre-underwriting review Treadstone's early-access AI mortgage underwriting is built to run.