Quick answer: An uninsured mortgage has no default insurance, so you pay no premium but need at least 20% down. In BC in 2026 you will use one when the price is $1.5 million or more, when you refinance, or when you have 20% down and choose a lender or term outside the insured rules. The insured price limit rose from $1 million to $1.5 million on December 15, 2024, so parts of the guide below are out of date.
In the Canadian real estate market, the phrase “20% down” is a magic number. It is the threshold that changes the entire structure of your loan.
Most first-time homebuyers are familiar with Insured Mortgages (often called “High-Ratio” mortgages), where you put down less than 20% and must pay a premium to CMHC, Sagen, or Canada Guaranty.
But what happens when you have a larger down payment, or you are buying a luxury home? You enter the world of Uninsured Mortgages.
This guide breaks down exactly what an uninsured mortgage is, how it differs from other loan types, and the strategic advantages it offers regarding monthly payments and purchasing power.
What is an Uninsured Mortgage?
An uninsured mortgage (often called a “Conventional Mortgage”) is a home loan that is not backed by default insurance.
Because the lender does not have the safety net of government-backed insurance if you default on payments, they take on more risk. As a result, the qualification criteria are different, and the rules regarding your property value and amortization period change significantly.
The 3 Criteria for an Uninsured Mortgage
You typically fall into the “Uninsured” category if any of the following apply to your transaction:
- High Down Payment: You are putting 20% or more down on the property.
- Property Price: The purchase price of the home is $1 Million or more (CMHC insurance is not available for homes over $1M).
- Amortization: You want a repayment period longer than 25 years (e.g., 30 years).
The “Mortgage Trifecta”: Insured vs. Insurable vs. Uninsured
This is where many borrowers get confused. In Canada, there are actually three categories, not just two.
| Feature | Insured | Insurable | Uninsured |
| Down Payment | Less than 20% | 20% or more | 20% or more |
| Insurance Cost | Paid by Borrower | Paid by Lender (backend) | None |
| Amortization | Max 25 Years | Max 25 Years | Max 30 Years |
| Purchase Price | Under $1 Million | Under $1 Million | No Limit |
| Interest Rates | Lowest | Medium | Slightly Higher |
- Insured: You pay the insurance premium.
- Insurable: You put 20% down, but you agree to strict rules (25-year limit) so the lender can insure it on the back end to give you a better rate.
- Uninsured: You break the rules (want 30 years or buying a $1M+ home). The lender cannot insure it at all.
The Pros and Cons of Going Uninsured
The Advantages
Why would someone choose an uninsured mortgage if the rates are slightly higher?
- 30-Year Amortization: This is the biggest advantage. By stretching your payments over 30 years instead of 25, you significantly lower your monthly obligation. This can help with cash flow or help you qualify for a larger loan amount.
- Luxury Purchasing Power: If you are buying a home in Vancouver or Surrey over the $1 Million mark, you must use an uninsured mortgage.
- Refinancing Flexibility: If you already own a home and want to pull equity out (up to 80% of the value) for renovations or debt consolidation, this is always an uninsured transaction.
The Disadvantages
- The Rate Difference: Uninsured mortgage rates are typically 0.10% to 0.30% higher than insured rates. This is because the lender is absorbing the risk of default without government protection.
- The Down Payment: You must have access to at least 20% of the purchase price (plus closing costs).
Does the Stress Test Apply?
Yes. Even with an uninsured mortgage, if you are borrowing from a federally regulated lender (like a major bank), you must pass the Mortgage Stress Test. You must prove you can afford payments at the contract rate plus 2% or 5.25%, whichever is higher.
Note: Some credit unions and alternative lenders have different stress test requirements for uninsured mortgages, offering more flexibility.
Is an Uninsured Mortgage Right for You?
An uninsured mortgage is not just a requirement for luxury buyers; it is a strategic tool.
If you are struggling with monthly cash flow, opting for an uninsured mortgage with a 30-year amortization might save you hundreds of dollars a month compared to a restricted 25-year insurable mortgage. Conversely, if getting the absolute lowest interest rate is your priority and your home is under $1M, you might opt to stick to the stricter “Insurable” rules.
Summary
Understanding the difference between insured and uninsured lending is vital to planning your financial future.
- Insured = Less down, lower rate, stricter limits.
- Uninsured = More down, flexibility, higher purchasing power.
While this guide covers the theory, the application depends on your unique financial picture.
What has changed since this guide was written?
Several federal rules moved, and they change who needs an uninsured mortgage:
- Price limit: insured mortgages are now available on homes priced below $1.5 million, not $1 million.
- Minimum down payment: 5% of the first $500,000, then 10% of the part from $500,000 to $1,499,999. At $1.5 million or more, you need 20%.
- 30 year amortization: first time buyers and buyers of newly built homes can now get 30 years on an insured mortgage, for an extra 0.20% premium. A 30 year term is no longer only an uninsured feature.
- Renewals: since November 21, 2024, a straight switch of an uninsured mortgage to a new lender at renewal does not need the stress test.
What does the choice look like on a Surrey home?
Here are two worked examples.
A $1,400,000 house. The minimum down payment is $25,000 plus 10% of $900,000, so $115,000. With that much down you would take an insured mortgage of $1,285,000 and pay a 4.00% CMHC premium of $51,400, added to the loan. With $280,000 down (20%), you pay no premium at all. That is a large saving if you have the cash, an FHSA, or a gifted down payment to get there.
A $1,600,000 house. Insurance is not available at this price. You need $320,000 down and borrow $1,280,000 uninsured. You still qualify at the higher of your rate plus 2% or 5.25% with a federally regulated lender.
Which uninsured files need extra planning?
- Refinances: always uninsured, and capped at 80% of the home's value with federally regulated lenders.
- Rental and investment properties: lenders look at rental income and your other properties, not just your job income.
- Self employed or bruised credit: a B lender or private lender can work when a bank declines, usually at a higher cost.
- Renewals: because a straight switch skips the stress test, it is worth comparing lenders before you sign your renewal letter.
What should you do next?
Compare the two paths on my insured vs uninsured mortgage page, see your options on uninsured mortgage solutions, and read about refinancing your mortgage if you already own. Then book an appointment so I can run your numbers both ways.