A conventional mortgage in Canada is a mortgage where the down payment is 20% or more of the purchase price. Because the loan is no more than 80% of the home’s value, the borrower doesn’t need mortgage default insurance from CMHC, Sagen or Canada Guaranty, and pays no premium. That sets it apart from a high-ratio (insured) mortgage in cost, rate pricing and amortization options. This guide covers what a conventional mortgage is and whether waiting to save 20% is worth it. It is part of our mortgage types hub.
Conventional vs high-ratio mortgage
| Feature | Conventional mortgage | High-ratio (insured) mortgage |
|---|---|---|
| Down payment | 20% or more | Less than 20% |
| Default insurance | Not required | Required |
| Insurance premium | None | A percentage of the loan, usually added to the mortgage (what it costs) |
| Sales tax on the premium | None | Payable at closing in some provinces (details) |
| Longest amortization | Set by the lender; 30 years is common | 25 years, or 30 for first-time buyers and new builds (30-year rules) |
| Purchase price limit | None | Below $1.5 million |
| Stress test | Yes | Yes |
| Interest rate | Often a little higher | Often the lowest available |
| Loan-to-value at purchase | Up to 80% | Up to 95% (one or two units) |
Lenders also sort mortgages with 20% or more down into two groups: insurable ones, which the lender can insure in bulk at its own cost, and uninsurable ones, such as those with amortizations over 25 years or on more expensive homes. The insured vs uninsured mortgages guide explains the three categories and how each is priced.
What a conventional mortgage saves
The obvious saving is the insurance premium. The less obvious one is interest: with a bigger down payment and no premium added, you borrow less.
A $600,000 home, comparing the minimum down payment with 20% down, at hypothetical rates of 4.5% insured and 4.6% conventional over 25 years:
| Minimum down (insured) | 20% down (conventional) | |
|---|---|---|
| Down payment | $35,000 | $120,000 |
| Insurance premium (4.00%), added to the loan | $22,600 | $0 |
| Mortgage | $587,600 | $480,000 |
| Monthly payment | $3,252 | $2,683 |
| Total interest over 25 years | $388,062 | $325,026 |
The conventional mortgage costs about $569 a month less and about $63,036 less in interest over 25 years, even at the higher rate, but needs about $85,000 more cash up front.
In provinces that charge sales tax on the premium, the conventional buyer also avoids that cash cost at closing. The CMHC insurance calculator works out the premium for other prices and down payments.
Amortization options
With 20% or more down, the insured-mortgage amortization limits don’t apply, so the lender sets the maximum. Many lenders offer 30 years on a conventional mortgage, and some go longer (extended amortizations). A longer amortization lowers the payment but adds interest; the 25 vs 30-year comparison puts numbers on it. A conventional mortgage with an amortization over 25 years can’t be insured, so it is usually priced as an uninsurable loan.
When a conventional mortgage is the only option
At a purchase price of $1.5 million or more, default insurance isn’t available. The minimum down payment is 5% of the first $500,000 and 10% of the rest for homes under $1.5 million, and 20% at $1.5 million or more. The million-dollar home guide covers financing at those prices. Insurance also isn’t available on a rental property you won’t live in, or on a refinance that takes out equity.
Should you wait until you have 20% down?
| A conventional mortgage tends to fit when | An insured mortgage tends to fit when |
|---|---|
| You already have 20% or more saved | You have 5% to 15% saved and want to buy sooner |
| You want an amortization longer than the insured limit | Prices are rising faster than you can save |
| You want to avoid sales tax on a premium at closing | Rent is close to what you’d pay to own |
| The home is a rental or second property | You qualify for first-time buyer programs that help with a smaller down payment |
Waiting has costs of its own: rent in the meantime, and any rise in prices while you save.
Suppose the $600,000 home rises 3% a year and rent is $2,000 a month while you save for 2 years.
| Buy now with the minimum down | Wait and buy with 20% down | |
|---|---|---|
| Purchase price | $600,000 | $636,540 |
| Down payment | $35,000 | $127,308 |
| Insurance premium | $22,600 | $0 |
| Rent paid while saving | $0 | $48,000 |
| Price rise while saving | None | $36,540 |
In this example the rent and the price rise together come to more than the premium saved; in a flat or falling market, or with fast saving, the answer can go the other way. What CMHC insurance costs has more on the cost of avoiding it.
Qualifying for a conventional mortgage
A conventional mortgage has to pass the same stress test as an insured one. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. The stress test guide explains how it is applied. Lenders also look at your debt service ratios; for an insured mortgage the limits are set by the insurer, while for a conventional mortgage each lender sets its own (see GDS and TDS ratios).
Down payment sources
| Source | Notes |
|---|---|
| Personal savings | Lenders usually ask for recent statements showing the money has been in your accounts |
| RRSP Home Buyers’ Plan | Up to $60,000 per person for eligible first-time buyers (HBP and FHSA) |
| FHSA | Tax-free withdrawals for a qualifying first home |
| Gift from family | Usually with a signed letter confirming it doesn’t have to be repaid |
| Sale of an existing home | Equity from the current property |
| Investments | Statements showing the funds |
| Borrowed funds | Depends on the lender; the payments count in your debt ratios |
Conventional mortgage vs conventional registration
“Conventional” also describes how a mortgage is registered on title: a conventional (standard) charge registers the amount you borrow, while a collateral charge can register more than that for future borrowing. A conventional (20%+ down) mortgage can use either kind of registration; collateral vs conventional mortgage registration explains the difference and the cost of switching lenders with each.
Related resources
Sources
The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Data table
- Canada Revenue Agency: RRSP: The Home Buyers' Plan
- CMHC: CMHC Purchase
- CMHC: Home Start
- Department of Finance Canada: Boldest mortgage reforms in decades come into force today
- Financial Consumer Agency of Canada: How much you need for a down payment
- Justice Laws (Canada): Bank Act
- Justice Laws (Canada): Eligible Mortgage Loan Regulations
- OSFI: Residential mortgage underwriting practices and procedures
- OSFI: OSFI exempts uninsured mortgage straight switches from the prescribed MQR andβ¦
- OSFI: Amendments to the minimum qualifying rate for uninsured mortgages