Insured Mortgages and Longer Amortization Period
Insured Mortgages and Longer Amortization Programs
1
What is an Insured Mortgage?
An insured mortgage simply means your mortgage is protected by mortgage default insurance. This insurance differs from optional mortgage protection insurance, which helps cover mortgage payments in the event of job loss, illness, or death.
Mortgage default insurance protects your lender if you’re ever unable to make your payments. In Canada, if your down payment is less than 20% of the home’s purchase price, you are required to get mortgage default insurance.
2
How does it help me?
An insured mortgage allows Canadians with smaller down payment funds available for a home purchase to qualify for a mortgage with as little as 5% down on the first $500,000. Plus, it often means you’ll get a better interest rate than you would with an uninsured mortgage. While there is an added cost for mortgage default insurance, achieving home ownership with a small down payment is possible.
3
Good News! More Homes Now Qualify Starting in 2025
In the past, insured mortgages were typically limited to homes under $1 million. That’s changed! Now, if you’re buying a home over $1 million but less than $1.5 million, and you have a down payment of less than 20%, you’ll need mortgage default insurance, sometimes referred to as an insured mortgage
Here’s how it works for homes over $1 million: The minimum down payment is 5% on the first $500,000 and 10% on the remaining portion of the purchase price up to $1.5 million. If the home is over $1.5 million, you will need a minimum down payment of 20%.
1
What is an Insured Mortgage?
2
How does it help me?
3
Good News! More Homes Now Qualify Starting in 2025
1
What is an Insured Mortgage?
An insured mortgage simply means your mortgage is protected by mortgage default insurance. This insurance differs from optional mortgage protection insurance, which helps cover mortgage payments in the event of job loss, illness, or death.
Mortgage default insurance protects your lender if you’re ever unable to make your payments. In Canada, if your down payment is less than 20% of the home’s purchase price, you are required to get mortgage default insurance.
2
How does it help me?
An insured mortgage allows Canadians with smaller down payment funds available for a home purchase to qualify for a mortgage with as little as 5% down on the first $500,000. Plus, it often means you’ll get a better interest rate than you would with an uninsured mortgage. While there is an added cost for mortgage default insurance, achieving home ownership with a small down payment is possible.
3
Good News! More Homes Now Qualify Starting in 2025
In the past, insured mortgages were typically limited to homes under $1 million. That’s changed! Now, if you’re buying a home over $1 million but less than $1.5 million, and you have a down payment of less than 20%, you’ll need mortgage default insurance, sometimes referred to as an insured mortgage
Here’s how it works for homes over $1 million: The minimum down payment is 5% on the first $500,000 and 10% on the remaining portion of the purchase price up to $1.5 million. If the home is over $1.5 million, you will need a minimum down payment of 20%.
Example Calculation for a $1.5 Million Home
Let's say you're buying a home
Mortgage Amount
$1.5 million
Since your down payment is less than 20%, you would also need to pay for mortgage default insurance, which is calculated as a percentage of your total mortgage amount.
*Disclaimer: This is a simplified example. The actual mortgage default insurance premium and other closing costs will vary.
New 30-Year Amortization Option for Newly Built Homes
First-time buyers purchasing a newly built home may now qualify for a 30-year amortization on an insured mortgage. This means you can spread your mortgage payments over a longer period, which lowers your monthly payment.
New 30-Year Amortization Option for Newly Built Homes
First-time buyers purchasing a newly built home may now qualify for a 30-year amortization on an insured mortgage. This means you can spread your mortgage payments over a longer period, which lowers your monthly payment.
Pros:
Lower Monthly Payments
This is the most significant advantage, making homeownership more accessible and freeing up cash flow for other expenses or investments.
Increased Purchasing Power
Lower monthly payments may allow you to qualify for a larger mortgage, potentially enabling you to buy a more expensive home or in a more desirable location.
Improved Debt-to-Income Ratio
Smaller mortgage payments can improve your debt-to-income ratio, making it easier to qualify for other loans or credit in the future.
Greater Financial Flexibility
With more manageable mortgage payments, you’ll have more financial breathing room to handle unexpected expenses, pursue other financial goals, or simply enjoy a more comfortable lifestyle.
Cons:
You'll Pay More Interest Overall
While your monthly payments are lower, you’ll be paying interest for a longer period, resulting in a higher total interest cost over the life of the mortgage.
We're Here to Help
Making sense of all the options available is not easy. At Dove Mortgages, we’ll help you understand if an insured mortgage is the right fit. We’ll review all the costs involved, explain the new 30-year amortization option, and compare different mortgage solutions to find the best one for you.
