Conventional vs Insured Mortgages: What’s the Difference?

Are you confused about the difference between a conventional mortgage and an insured mortgage? You’re not alone. If you’re planning to buy a home in Canada, this is the kind of “small detail” that can change your budget, your rate, and even your buying timeline.

In this blog, I’m breaking down what each mortgage type means, how it affects your down payment and monthly payments, and what lenders are really looking for when you apply for financing.

What is a conventional mortgage?

A conventional mortgage means you’re putting 20% or more down on the purchase price. In most cases, that means you do not need mortgage default insurance, and you typically have more flexibility in how the mortgage is structured.

Here’s why many buyers aim for conventional financing:

You avoid mortgage insurance premiums, which can save you thousands over time. Lenders generally view this as lower risk, which can improve your options. You may also have more flexibility around amortization and certain financing structures, depending on the lender and product.

Bottom line: if you’ve saved 20% down, a conventional mortgage often gives you more flexibility and can reduce your total borrowing costs.

What is an insured mortgage?

If you’re putting less than 20% down, your mortgage is considered high ratio and must be insured, typically through CMHC, Sagen, or Canada Guaranty.

This is where buyers get tripped up, because the insurance is not optional. It is required by the lender.

What this usually means:

You pay a mortgage insurance premium that is based on your down payment and loan amount. That premium is typically added to your mortgage. The insurance protects the lender, not you, but it can also come with a benefit buyers like: insured mortgages often qualify for very competitive interest rates.

The big advantage is timing. An insured mortgage can let you enter the market sooner with less cash up front, while keeping some savings available for closing costs, renovations, or a financial cushion.

So which mortgage should you choose?

This depends on your goals and your cash flow, not just the interest rate.

If your priority is to avoid insurance premiums and you have 20% down, a conventional mortgage can be the cleanest long term option. If your priority is buying sooner with a smaller down payment, an insured mortgage may be the right move, especially if you want to start building equity now.

What this means for you: the “best” mortgage is the one that matches your timeline, your comfort level each month, and your long term plan.

Let’s talk strategy

If you’re not sure which option fits you, I’m here to help you build a simple game plan based on your budget and timeline. No pressure, just clear guidance.

Erin Price Emery
Vancouver REALTOR® | The Collective Real Estate Team | Oakwyn Realty
erin@priceemery.com
Call or text: 604-767-7725
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