HIGH RATIO OR CONVENTIONAL MORTGAGE

How Much Do I Need For My Downpayment?
While it is possible to buy a home with as little as 5% down, the amount of your downpayment will determine whether you'll have a conventional mortgage or an insured, high-ratio mortgage.

What's the difference?

Conventional Mortgage: means your downpayment is at least 20% of the purchase price or appraised value whichever is less. There is no insurance fee with this type of mortgage.

High-Ratio Mortgage: means your downpayment is less than 20% of the purchase price. High Ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada and require you to pay an insurance premium. The lower the down payment the higher the insurance fee, this fee can be added to your mortgage.

What is Mortgage Loan Insurance?
Mortgage loan insurance protects lenders from borrower default. Borrowers who put down less than 20% are considered riskier borrowers. Even with stellar credit, if you apply for a mortgage and don´t have at least a 20% down payment, you will have to purchase mortgage insurance. The benefit of paying the fee is that the home-buyer can obtain a home and start paying themselves versus paying their landlord.

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