Conventional vs insured mortgages and the stress test
Insured (under 20% down) and conventional (20% or more down) mortgages use the same stress test: contract rate + 2 points or 5.25%. Insured loans add a premium of 2.80% to 4.00% to the loan, have fixed 39%/44% limits and a $1,500,000 price cap, but averaged 4.12% against 4.58% uninsured (August 2026), so they qualify at a lower rate.
What's the difference between an insured and a conventional mortgage?
An insured (high-ratio) mortgage is one with less than 20% down; mortgage default insurance is required and its premium is usually added to your loan. A conventional (uninsured) mortgage has 20% or more down and no premium. Both face the same stress test, but the rules around it differ:
| Insured (under 20% down) | Conventional (20% or more down) | |
|---|---|---|
| Qualifying rate | Contract + 2 points or 5.25%, in federal regulation | Contract + 2 points or 5.25% at federally regulated lenders (OSFI B-20) |
| Applies at | Every lender, including credit unions | Banks and federally regulated trust companies; credit unions follow their province |
| GDS / TDS limits | 39% / 44%, fixed | Each lender sets its own |
| Minimum down payment | 5% of the first $500,000, 10% of the rest | 20% |
| Price limit | Under $1,500,000 | None in the federal rules |
| Longest amortization | 25 years; 30 for first-time buyers and new builds | Set by the lender |
| Insurance premium | 2.80% to 4.00% of the loan, plus 0.20% over 25 years | None |
| Credit score | At least 600 for one borrower or guarantor | Set by the lender |
| Average 5-year fixed rate (August 2026) | 4.12%, qualifying at 6.12% | 4.58%, qualifying at 6.58% |
The price cap creates a cliff. At $1,499,000 the minimum down payment is $124,900; at $1,500,000 the home can't be insured, so the minimum becomes 20%, or $300,000.
Terms on this page
- Insured (high-ratio) mortgage
- A mortgage with less than 20% down. Default insurance is mandatory, and the borrower pays the premium.
- Conventional (uninsured) mortgage
- A mortgage with 20% or more down and no borrower-paid insurance.
- Portfolio (low-ratio) insurance
- Insurance a lender buys on loans with 20% or more down, often in bulk. The federal insured test applies to those loans too.
- Loan-to-value (LTV)
- The loan divided by the price. It sets the premium rate, which falls as your down payment rises.
Is the stress test the same for both?
The formula is identical: the greater of your contract rate plus 2 points or 5.25%. What differs is who sets it and what it's measured against.
For insured loans the test is written into the federal mortgage-insurance regulations, so it follows the loan to any lender. The ratio caps are fixed at 39% for housing costs (GDS) and 44% for all debts (TDS), and at least one borrower or guarantor needs a credit score of 600.
For conventional loans, OSFI's Guideline B-20 sets the qualifying rate at federally regulated lenders but leaves the ratio limits and how they're calculated to each lender. OSFI sets no number; many lenders use limits similar to 39% and 44%. Provincially regulated credit unions follow their own regulator; see the province table.
The biggest practical difference is the rate itself. At the Bank of Canada's August 2026 averages, insured loans were cheaper: 4.12% insured against 4.58% uninsured. A lower contract rate means a lower qualifying rate, 6.12% against 6.58%.
B-20 on lender-set debt service metrics: Source: OSFI, Guideline B-20: Residential mortgage underwriting practices and procedures, effective January 1, 2018. Checked .Does the same home pass with 10% or 20% down?
The cleanest way to see the trade is to hold the home fixed and change only the down payment.
A household earning $128,000 with $380 a month of other debts, not first-time buyers, 25 years. With 10% down the loan is insured at the 4.12% insured average; with 20% it's conventional at the 4.58% uninsured average (August 2026).
| Household income, other debts | $128,000; $380 a month |
|---|---|
| Price | $620,000 |
| Down payment | 10%: $62,000 · 20%: $124,000 |
| Contract rate | 10%: 4.12% · 20%: 4.58%Bank of Canada averages, insured vs uninsured |
| Property tax, heating | 0.8% of price a year, $100 a monthOur planning estimates |
| Mortgage incl. premium | 10%: $575,298 · 20%: $496,000$17,298 premium (3.10%) on the insured loan; none at 20% |
| Qualifying rate | 10%: 6.12% · 20%: 6.58% |
| Payment the lender tests | 10%: $3,722 · 20%: $3,346 |
| GDS / TDS | 10%: 39.7% / 43.3% · 20%: 36.2% / 39.7%Limits 39% / 44% |
| Payment you'd actually make | 10%: $3,064 · 20%: $2,767 |
| Interest over a 5-year term | 10%: $110,387 · 20%: $106,085If the rate holds; semi-annual compounding |
| Result | 10% down fails on GDS; 20% down passesThe 20% loan is $79,298 smaller; its qualifying rate is 0.46 points higher |
A higher rate doesn't automatically make the test harder. The conventional loan is tested at 6.58% against 6.12%, yet it passes with room to spare because $62,000 more down and no $17,298 premium take $79,298 off the loan. The insured buyer misses by a small margin: housing costs come to 39.7% of income against the 39% limit.
Real offers differ from averages, so price both versions with real quotes. Open the 20% version in the calculator to compare.
Open the 10% version in the calculator →Premiums: CMHC premium table. Rates: Bank of Canada averages.Computed November 1, 2026.
How much can you buy with 10% vs 20% down?
Now let the price move instead. Each column asks: if the down payment is this share of the price, what's the highest price the same $128,000 household passes at? The insured columns use the 4.12% insured average, the 20% column the 4.58% uninsured average.
| Minimum down | 10% down | 15% down | 20% down | |
|---|---|---|---|---|
| Down payment | $32,890 (5.7%) | $60,870 (10.0%) | $96,360 (15.0%) | $133,900 (20.0%) |
| Highest price that passes | $578,900 | $608,700 | $642,400 | $669,500 |
| Insurance premium | $21,840 (4.00%) | $16,983 (3.10%) | $15,289 (2.80%) | None |
| Total mortgage | $567,850 | $564,813 | $561,329 | $535,600 |
| Qualifying rate | 6.12% | 6.12% | 6.12% | 6.58% |
| Monthly payment you'd actually make | $3,024 | $3,008 | $2,989 | $2,988 |
| Payment the lender tests | $3,674 | $3,654 | $3,632 | $3,614 |
Property tax 0.8% of price a year (our estimate), heating $100 a month, 39% / 44% limits in every column. Each column is a different amount of savings. Computed by our engine.
A bigger down payment raises the price you can reach, but by less than the extra cash, because the 20% column is tested at the higher uninsured rate; dropping the premium only partly offsets that. Going from 10% to 20% down takes $73,030 more savings and adds $60,800 of price.
One quirk of averages: a buyer putting 19.9% down, still insured at the 4.12% average, would pass up to $677,300, more than the $669,500 at 20% down and 4.58%. Real offers vary by lender and borrower, so compare actual quotes, not averages.
What does the premium do to the stress test?
The premium is added to the mortgage, and the lender tests the full amount. In the 10% column, $16,983 of premium sits on top of a $547,830 loan, so the qualifying payment is calculated on $564,813. The premium rate falls as your down payment rises: 2.80% up to 85% loan-to-value, 3.10% up to 90% loan-to-value, 4.00% up to 95% loan-to-value. Choosing a 30-year amortization, where you're eligible, adds 0.20%.
In payment terms, the $21,840 premium in the minimum-down column adds about $141 a month to the payment the lender tests and $116 to the payment you'd actually make. That's the price of buying sooner with less saved; whether it's worth it depends on how long saving the rest would take and what prices and rates do meanwhile.
Premium table by loan-to-value: Source: CMHC, Mortgage loan insurance cost (premium table). Checked .Does insured vs conventional matter at renewal?
Less than it used to. Renewing with your own lender isn't retested either way. Moving to another lender at renewal with the same balance and amortization (a straight switch) is now exempt for both, but under different rules:
- Insured (high-ratio): the Canadian Mortgage Charter, from November 21, 2023, says insured borrowers shouldn't have to requalify when they switch at renewal.
- Low-ratio insured (portfolio insurance): written into federal regulation from December 16, 2024. The amortization can't change, no equity can be taken out, and the balance may rise by at most $3,000 to cover switching costs.
- Conventional: OSFI stopped expecting the qualifying rate for uninsured straight switches to another federally regulated lender from November 21, 2024. A lender may still choose to requalify you.
Quebec's AMF guideline, which covers Desjardins caisses, has no switch exemption. Details and the conditions are in the straight-switch rules.
Low-ratio insured straight switches: Source: Department of Finance Canada, Straight switches and portfolio insurance, effective December 16, 2024. Checked .Uninsured straight switches: Source: OSFI, OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits, effective November 21, 2024. Checked .What do people get wrong about insured and conventional loans?
- "20% down means no stress test." At a bank or federally regulated trust company, B-20 applies the same qualifying rate to conventional loans.
- "A higher rate always makes the test harder." Not when the loan is much smaller; the worked example tests both versions of one home.
- "Insured is cheaper because the rate is lower." The premium is part of the loan and you pay interest on it. Compare the payment and the interest with the premium included.
- "Conventional lenders have no ratio limits." They set their own; OSFI expects them to be calculated conservatively.
What this means for you
- If you're close to 20%: run both versions on the stress test calculator with real quotes. A little more saved can remove the premium and still pass at a higher rate.
- If you have 5% to 15% down: you'll be tested at the insured rate + 2 points against fixed 39% / 44% limits at any lender. Ask for the payment with the premium included.
- If the home is near $1,500,000: at $1,500,000 or more you need 20% down, so check the cliff before you bid.
- If you're a first-time buyer: the 30-year insured amortization is open to you; see first-time buyers and the stress test.
Frequently asked questions
Is the stress test the same for insured and conventional mortgages?
Yes, the formula is the same: the greater of the contract rate + 2 points or 5.25%. Insured loans have fixed 39% / 44% limits; conventional lenders set their own.
Do I pass the stress test more easily with 20% down?
Often, because you borrow less and pay no premium, even though conventional rates have averaged higher than insured rates. Run both versions with real quotes; the answer depends on the size of the gap in rates.
Is the mortgage insurance premium included in the stress test?
Yes. The premium is added to the loan, and the lender tests the payment on the full amount.
Is there a price limit on insured mortgages?
Yes. Since December 15, 2024, the purchase price must be under $1,500,000. At $1,500,000 or more you need at least 20% down.
Can I switch lenders at renewal without the stress test?
Generally yes for a straight switch with the same balance and amortization: insured loans under the Canadian Mortgage Charter and federal regulation, conventional loans under OSFI's November 2024 exemption. Quebec caisses have no exemption.
Primary sources
- Justice Laws — Insurable Housing Loan Regulations (SOR/2012-282), ss. 5, 6 and 6(3.1) (effective February 27, 2025). Checked .
- Justice Laws — Eligible Mortgage Loan Regulations (SOR/2012-281) (effective February 27, 2025). Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (effective January 29, 2026). Checked .
- OSFI — Guideline B-20: Residential mortgage underwriting practices and procedures (effective January 1, 2018). Checked .
- CMHC — Homeowner mortgage loan insurance: Purchase (eligibility). Checked .
- CMHC — Home Start: 30-year amortization for first-time buyers and new builds. Checked .
- Department of Finance Canada — Mortgage reforms in force: $1.5M insured price cap, 30-year amortization (effective December 15, 2024). Checked .
- Bank of Canada — Banking and financial statistics: effective rates on new mortgages. Checked .
- Department of Finance Canada — 2023 Fall Economic Statement, Chapter 1: the Canadian Mortgage Charter (effective November 21, 2023). Checked .
- Department of Finance Canada — Straight switches and portfolio insurance (effective December 16, 2024). Checked .
- OSFI — OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits (effective November 21, 2024). Checked .
- Autorité des marchés financiers (Québec) — Residential hypothecary lending guideline (revised September 2026) (effective September 1, 2026). Checked .