Originally emailed out to newsletter list on April 7th, 2025.
If you have less than 20% down on a purchase, it’s high ratio insured, no question. Easy peasy.
If you have 20% or more down, your loan could either be insurable, or uninsured. Whether you’re insurable or uninsured is really the main determinant of your mortgage rate. I can break it down for you a little more without getting too technical.
You may be “insurable” if your loan still qualifies under the more strict guidelines of our three insurers, CMHC, Sagen, or Canada Guaranty. Maximum GDS (gross debt service ratio, or the housing payment to income ratio) here is 39%. No questions.
Back story – I submitted a file back in 2012 with a GDS of 39.02% (yes that close), and assumed they would approve the loan. Nope. It has to be under 39%, hard stop. I of course got the deal done, 0.02% off on my debt servicing ain’t gonna stop me.
Back to it – how does the more than 20% downpayment loan actually become insurable?
When the loan is funded, the lender pays for that mortgage to be insured. This benefits the client with a lower rate, and benefits the lender with a no risk loan. Because the premiums at 35% down or more are much cheaper than the premium at 20% down, the rate is better when there is 35% down.
20% down insurable rates are generally closer to uninsured rates.
Purchases and straight renewals (with no new money added to the loan amount), can qualify for insurable loans.
You may or may not get better rates with an insurable loan, it really depends on how much you’re putting down, or what your loan to value ratio is. This is where you really have to call us and I’ll tell you what the rate is going to be.
While there’s no wiggle room on ratios or guidelines for insured or insurable loans, we can really push the envelope on the guidelines when it comes to uninsured loans.
In some cases, banks may even go up to 50% debt servicing ratios on uninsured loans, if they feel that the deal makes sense and if they want the client. They may be willing to make exceptions on income guidelines, credit scores, and debt servicing.
There are many more ways to make a deal work on the uninsured side. This is another reason why we’re the experts here. We know how to package a deal to give it the best chance for approval.
Uninsured loan pricing is very discretionary now, and generally the most discounted rate is only given when the mortgage goes live (so when the client has an accepted offer in place, and when we submit the application and get it approved.
We have rate sheets from banks and lenders with posted rates, but we don’t really know how deep the bank is willing to discount a deal until they approve it. So while some smaller loans might not qualify for a huge discount, larger loans may.
If you’re mortgage is up for renewal, or even if it’s not, you might need to refinance your home to pull out some of the equity. You can then use your newfound money for a variety of purposes.
Most people refinance to payoff high interest unsecured debt like credit cards or car loans. Other people use the funds as a down-payment on an investment property. You can use funds for whatever you need, but I always suggest that you use the funds wisely, because remember, you have to pay it back, eventually.
Not everyone is in the position to do it, and not everyone wants to be a landlord.
Think about this though. It’s great having one property when the market shifts from a buyers to a sellers market. Property values increase dramatically when we move from a buyers market to a sellers market.
So imagine owning two properties instead of one. Your equity increases twofold, or more. It’s a double whammy of real estate gains.
We just did a couple of these in the last few months. Both sets of clients refinanced first to get their downpayment ready. Then they found their next home, and they were able to be aggressive in their offers for their 2nd property.
If you want to be aggressive and get a great deal on a 2nd property (or your 1st), then you’ll want to give us a call, or heck, just book into my calendly, link below in a bigger font. You’ll be glad you did. I get them ALL done. ALL OF THEM.
Are you, or anyone you know putting less than 20% downpayment on a purchase? Does that person also need a higher pre-approval amount to get the property that they really want? Then you really need to tell them to give me a call (or just forward them this email, and they can book into the calendly link).
We recently just used our exclusive rate to get clients qualified for a 1.26 million purchase price with 10% downpayment. First time homebuyers. Good credit. High income, but not quite high enough to qualify on the regular 3.89% 5 year rate.
So we got the 6 month rate low enough that the clients all of a sudden qualified for their dream property. Yup, in this case, the rate is so low that they have to pay us a fee to get this one done.
I won’t tell you how low I can go on this 6 month rate here, because that’s information that’s unique to each deal. Pricing on this special rate is highly volatile.
I’m working on created a webpage that is going to help me quote the 6 month rate, without even speaking to me. You fill out the criteria of the deal, and then we return you a rate plus any other fees on your exact deal. No conversation needed.
I’ll communicate the pricing tool soon, I’ll work on it this week, once I get my accounting done (yikes I hate doing my accounting).
There’s a couple in Nanaimo that are closing on their new home tomorrow. These two are convinced that world is against them. Bad luck all the time. So throughout the mortgage application and approval, they kept asking me, “is this going to happen?”, repeatedly.
Even thought I reassured them many times, they were convinced that their deal was going to fall through. Before the deposit, and yes, even after they made their deposit.
I’m happy to report that our record of 100% closings after subject removal is still intact. These folks are closing tomorrow, and they can hardly believe it.
This is what makes this job worth it. It’s been stressful and I think I’ve lost most of my hair because of all that stress, but hey, who needs hair anyways? I’ll come to embrace my baldness like Larry David.
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