Insured vs Uninsured RBC Mortgage Rates: What’s the Difference?

What Are Insured and Uninsured Mortgages?

When you get a mortgage in Canada, the terms “insured” and “uninsured” refer to whether mortgage default insurance is required. An insured mortgage—also called a high-ratio mortgage—is one where the borrower has a down payment of less than 20% of the home’s purchase price. Because the down payment is small, the lender faces a higher risk of loss if you default, so mortgage default insurance is required.

An uninsured mortgage, on the other hand, is one where the borrower has a down payment of 20% or more. With a larger down payment, the lender’s risk is lower, and mortgage default insurance is not required.

There’s also a third category that plays a role in pricing: an insurable mortgage. This is a mortgage with a down payment of 20% or more that meets the rules for portfolio mortgage default insurance. In that case, the lender may insure the mortgage as part of a portfolio, but the borrower does not pay the insurance premium directly. Mortgages that don’t meet these rules are called uninsurable and typically have the highest rates.

• Insured mortgage: down payment less than 20%, insurance required, borrower pays premium.
• Uninsured mortgage: down payment 20% or more, insurance not required.
• Insurable mortgage: down payment 20% or more, meets insurer rules, lender may insure but borrower doesn’t pay premium.
• Uninsurable mortgage: down payment 20% or more but fails insurer criteria, typically higher rates.

Sources: Ratehub.ca, WOWA.ca

How Mortgage Default Insurance Works

Mortgage default insurance protects the lender, not the borrower. If you stop making payments and the lender has to sell the home at a loss, the insurer covers the shortfall. Because this insurance reduces the lender’s risk, lenders reward insured mortgages with lower interest rates.

The insurance premium is paid by the borrower, and the cost ranges from 0.6% to 4% of the total mortgage amount, depending on your loan-to-value ratio (how much you borrow compared to the home’s value). The premium is typically rolled into your regular mortgage payments, so you don’t pay it as a separate upfront lump sum unless you choose to.

To be eligible for mortgage default insurance, the home’s purchase price must be below $1.5 million and the property must be owner-occupied. Insured mortgages are limited to a maximum amortization of 25 years.

The minimum down payment is 5% for homes priced at $500,000 or less, and 10% on the portion above $500,000 for homes priced over $500,000.

• Insurance protects the lender, not the borrower.
• Premiums range from 0.6% to 4% of the mortgage amount.
• Premiums are usually added to monthly payments.
• Eligibility requires a purchase price under $1.5 million and an owner-occupied property.

Sources: Ratehub.ca

Rate Differences Between Insured and Uninsured Mortgages at RBC

The core reason insured mortgages get lower rates is that default insurance reduces the lender’s risk. As a result, RBC and other lenders typically offer lower interest rates on insured mortgages compared to uninsured ones.

While specific rates change frequently, the pattern is consistent: insured mortgages usually have lower rates than uninsured ones. Your actual rate will depend on your credit score, the size of your down payment, your amortization, and other factors.

It’s also important to know that an insurable mortgage—where you have 20% down and meet insurer rules—may get a rate that sits between insured and uninsured, because the lender can obtain portfolio insurance. An uninsurable mortgage, such as one for a rental property or with a long amortization, typically carries the highest rate.

• Insured mortgages typically have lower rates than uninsured ones.
• Insurable mortgages may fall between the two.
• Uninsurable mortgages generally have the highest rates.
• Actual rates depend on your financial profile and market conditions.

Sources: Ratehub.ca, WOWA.ca, NerdWallet Canada

Eligibility Criteria for Insured Mortgages

To qualify for an insured mortgage, you must have a down payment of less than 20%, the purchase price must be under $1.5 million, and the property must be owner-occupied. There are also limits on the maximum amortization: 25 years.

For an insurable mortgage—one where the lender may seek portfolio insurance—the rules are stricter. The purchase price must be under $1 million, the amortization must be 25 years or less, the property must be owner-occupied, and the borrower needs a credit score of at least 600. In addition, the borrower must meet debt service ratio limits set by insurers: gross debt service (GDS) of 39% and total debt service (TDS) of 44%.

Certain mortgages are considered uninsurable and therefore don’t qualify for the lower rates associated with insurance. Common examples include mortgages for rental properties, refinances, properties above the price cap, or mortgages with amortizations longer than allowed. These uninsurable mortgages typically have higher interest rates.

• Insured: down payment <20%, price <$1.5M, owner-occupied, amortization ≤25 years.
• Insurable: down payment ≥20%, price <$1M, owner-occupied, credit score ≥600, GDS ≤39%, TDS ≤44%, amortization ≤25 years.
• Uninsurable: rental properties, refinances, high-priced homes, long amortizations.

Sources: Ratehub.ca, WOWA.ca

How to Get the Best Insured or Uninsured Rate

The rate you’ll be offered depends on multiple factors, including your credit score, down payment size, amortization, and the type of mortgage you choose. Lenders see a larger down payment as reducing their risk, which can lead to a better rate—but that’s only one factor.

For the best insured rate, you need to meet the insurer’s criteria: a down payment under 20%, a purchase price under $1.5 million, and an owner-occupied property. Keeping your amortization at 25 years or less also helps.

For the best uninsured rate, aim to have a 20% down payment and meet the insurable mortgage rules—property under $1 million, owner-occupied, credit score of 600 or higher, and debt service ratios within limits. This makes your mortgage attractive for portfolio insurance, which may earn you a lower rate than an uninsurable mortgage.

• Larger down payments can lower your rate, but other factors matter too.
• For insured rates, stay within insurer limits on price, occupancy, and amortization.
• For uninsured rates, aim for an insurable mortgage to access better pricing.
• Compare offers from multiple lenders and verify current rates on official sites.

Sources: Ratehub.ca, WOWA.ca, NerdWallet Canada, Consumer Financial Protection Bureau

Insured vs Insurable vs Uninsurable: Key Differences

The table below summarizes the main differences among mortgage types, based on eligibility rules and interest rate trends. Remember that your actual rate will depend on your personal financial profile.

Sources: Ratehub.ca, WOWA.ca