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An insured mortgage carries mortgage default insurance, which protects the lender — not the borrower — if the loan goes into default. It’s required whenever the down payment is under 20%, and only available on homes priced under the insured cap.
Despite the name, mortgage default insurance covers the lender’s losses if the borrower defaults, not the borrower’s equity or payments. It’s what allows federally regulated lenders to fund a high-ratio mortgage at all, since a down payment under 20% is otherwise too risky to lend against without a backstop.
Insured status brings its own eligibility rules: the purchase price has to sit under the insured cap, the file has to meet GDS/TDS ceilings, and the amortization is generally capped shorter than what an uninsured borrower might negotiate.
Cap on eligible purchase price: insured mortgages are limited to purchases up to $1.5 million, effective December 15, 2024 (raised from $1 million).
Ratio ceilings: insured files must meet a maximum GDS of 39% and TDS of 44%, calculated at the minimum qualifying rate.
Amortization limits: the standard maximum is 25 years, though first-time buyers and buyers of new builds can access 30-year amortization under the December 2024 reforms.
Premium scales with LTV: default-insurance premiums run roughly 0.60% to 4.00% of the loan amount depending on LTV, with a surcharge on eligible 30-year insured amortizations.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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