Mortgage Introduction

Conventional or High-Ratio

A conventional mortgage is a loan for no more than 80% of the appraised value or purchase price of the property, whichever is less.

The remaining amount required for a purchase (20%) comes from your resources and is referred to as the down payment. If you have to borrow more than 80% of the money you need, you will be applying for what is called a high-ratio mortgage.

How a high-ratio mortgage works:

You can purchase with $0 down payment if you have excellent credit history or you must have at least a 5% down payment when you buy a home.

Any purchase where the down payment is between 0% and 19.99% is considered a high-ratio mortgage, and the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or SAGEN Insurance.

The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 2.80% to 4.00% of the principal amount of your mortgage. This amount can be paid up front or added to the principal portion of your mortgage.
A mortgage broker can help you determine the exact amount.