Insured and conventional mortgages

Definition

A mortgage is insured when the down payment is under 20%: the insurer (CMHC, Sagen, Canada Guaranty) covers the lender in case of default, and you pay the premium. A mortgage is conventional at 20% down and above: no premium, but the lender carries the risk alone and can be more selective. The two worlds do not follow the same rules. An insured loan gives access to the lowest rates but imposes a maximum price, a capped amortization, owner occupancy, and strict income criteria. A conventional loan allows 30-year amortization, non-owner-occupied buildings, and income read more flexibly at some lenders, often at a slightly higher rate. Example: at 19% down, you pay a premium of about 2.8% of the loan; at 20%, nothing. On $400,000 the difference is about $9,000, which can justify waiting one more month of saving.