Insured Mortgages in Kelowna

An insured mortgage makes homeownership possible for buyers who have a smaller down payment. By reducing risk for lenders, mortgage insurance allows qualified borrowers to purchase a home with as little as 5% down—often at very competitive interest rates.

If you’re buying a home and planning to put down less than 20%, mortgage default insurance is required under Canadian lending rules.

An insured mortgage is a home loan that includes mortgage default insurance, which protects the lender if the borrower is unable to make their mortgage payments.

In Canada, this insurance is provided by organizations such as the Canada Mortgage and Housing Corporation (CMHC). While the insurance protects the lender, the cost of the premium is paid by the borrower.

Mortgage insurance is mandatory when:

• Your down payment is less than 20%
• The purchase price of the home is under $1,500,000

Insured mortgages have a maximum amortization of 25 years (30years for the first time buyers).

Although the lender pays the insurance premium upfront, the cost is passed on to the borrower. This can be done in one of two ways:

• Paid as a lump sum at closing, or
• Added to the mortgage balance and included in your regular mortgage payments

Most buyers choose to add the premium to their mortgage to reduce upfront costs.

Federal mortgage rules have evolved over time to manage risk in the housing market. Key changes that affect insured mortgages include:

• Homes priced over $500,000 require a higher minimum down payment
• Borrowers with fixed-rate mortgages of five years or longer must qualify using the federal stress test rate
• Buyers of energy-efficient homes may qualify for discounted CMHC insurance premiums

Understanding these rules is important, as they directly affect affordability and qualification.

The required down payment depends on the purchase price of the home:

• $500,000 or less → Minimum 5% down
• Over $500,000 →
  
  • 5% on the first $500,000
  • 10% on the portion above $500,000

Mortgage insurance is not available for homes priced at $1,500,000 or more.

An insured mortgage allows buyers to:

• Purchase a home with as little as 5% down
• Access lower interest rates compared to many uninsured mortgages
• Enter the housing market sooner, even during uncertain economic conditions

Because the lender’s risk is reduced, insured mortgages are often priced more competitively than uninsured options.

Mortgage insurance premiums vary based on the size of your down payment. In general, premiums range from approximately 1.8% to 3.6% of the mortgage amount.

The smaller the down payment, the higher the insurance premium. This cost can amount to several thousand dollars and is typically added to the mortgage balance.

In some provinces—including Ontario, Quebec, and Manitoba—provincial sales tax applies to the insurance premium. This tax must be paid at closing and cannot be added to the mortgage.

The insurance premium is calculated using the following steps:

1. Determine your down payment as a percentage of the purchase price
2. Subtract the down payment from the purchase price to find the mortgage amount
3. Apply the applicable insurance premium percentage to the mortgage amount
4. Add the insurance premium to the mortgage to determine total borrowing

A mortgage professional can help calculate this precisely and compare insured vs uninsured options.

The only way to avoid mortgage default insurance is to make a down payment of at least 20% of the purchase price.

This may involve:

• Saving for a longer period
• Purchasing a less expensive property
• Using gifted funds or equity (where permitted)

While avoiding mortgage insurance reduces total borrowing costs, insured mortgages can still be an excellent option for buyers who want to enter the market sooner.

Insured mortgages play a key role in helping Canadians achieve homeownership with smaller down payments. When structured properly, they can offer strong interest rates and a manageable path into the housing market.

If you’re unsure whether an insured mortgage is right for you—or want to compare insured and uninsured options—I can help you review your choices and determine the best approach for your situation.

Let’s explore your options and find the right mortgage solution for you.