This Weeks Rates:
Insured:
- 5-year fixed: Starting at 3.79%
- Variable: Starting at 3.44%
Insurable:
- 5-year fixed: Starting at 3.89%
- Variable: Starting at 3.65%
Conventional:
- 5-year fixed: Starting at 4.09%
- Variable: Starting at 3.85%
CMB:
- 5-Year: 3.12%
- 10-Year: 3.68%
Scott Dillingham is a licensed mortgage broker who has helped clients finance over $1 billion in real estate. He works closely with REALTORS® to help their clients get financing approved — and in this episode, Scott breaks down one of the most misunderstood topics in Canadian real estate: why putting more money down doesn't always mean you'll get a better interest rate.
Scott walks through the three types of residential mortgages in Canada — insured, insurable, and conventional — and explains exactly how each one affects the interest rate your clients will be offered. Many buyers are shocked to learn that a 5% down payment can actually result in a lower rate than a 20% down payment, and Scott explains the mechanics behind this in plain language you can use with your clients.
From CMHC default insurance to bulk backend insuring, Scott demystifies the lender's perspective on risk and pricing. He also covers the quirky amortization limitation that comes with insurable mortgages — why a client with 20% or more down is capped at a 25-year amortization if they want to access better rates — and how that stacks up against the newer 30-year amortization available to first-time buyers with less than 20% down.
Scott also covers special-case scenarios where lenders will require CMHC insurance even on high-down-payment deals — such as properties near commercial zones or train tracks — and how that can actually work in the buyer's favour by unlocking better rates. This episode is packed with conversation starters you can use to keep hesitant buyers off the sidelines and moving toward a purchase.
Key Takeaways
- Insured mortgages (less than 20% down) typically have the best interest rates because the lender's risk is fully covered by CMHC, Sagen, or Canada Guaranty default insurance.
- Insurable mortgages (20%+ down with backend bulk insurance) offer the next best rates — no fee to the borrower, but the lender secures group insurance behind the scenes at a discounted cost.
- Conventional mortgages (20%+ down, no insurance) carry the highest rates because the lender absorbs all risk in the event of a default.
- Clients with 20% or more down are capped at a 25-year amortization if they want insurable rates, while those with less than 20% can access 30-year amortization as first-time buyers.
- The CMHC fee for a 5% down purchase is 4% of the loan amount — often higher than the fees charged by private lenders, which puts private lending fees in perspective.
- Some properties with unique risk factors — such as those near commercial zones or train tracks — may require CMHC insurance regardless of down payment, which can actually benefit the buyer with better rates.
- Understanding these tiers helps REALTORS® keep hesitant buyers moving forward by clearly explaining why waiting to accumulate a larger down payment may not result in the rate savings they expect.
Show Resources
Links and Show References
No external resources were mentioned in this episode.
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Are your clients getting the best mortgage advice? Send them to LendCity.ca — Scott Dillingham and his team work exclusively with REALTORS® and their clients to get deals done. Visit LendCity.ca to refer your clients today.
- (00:00) - Introduction: Down Payments & Interest Rates
- (01:08) - The Three Types of Residential Mortgages
- (01:48) - Why 5% Down Can Get You a Better Rate Than 20%
- (03:02) - Insurable Loans: The Middle Tier Explained
- (03:59) - The 25 vs 30-Year Amortization Quirk
- (05:08) - Conventional Loans: Highest Risk, Highest Rate
- (05:40) - Helping Clients Understand Their Options
- (06:46) - Special Cases Where CMHC Insurance Is Required
- (07:36) - Wrap-Up & Call to Action
Show Resources:
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We do this to help you grow. Please share with a friend!