High Ratio Mortgage
A high-ratio mortgage is a mortgage where the down payment is less than 20% of the purchase price. In Canada, these mortgages must be insured against default through a mortgage insurer, and the premium is typically added to the mortgage balance.
High-ratio mortgages can help buyers enter the market with a smaller down payment, but the added insurance premium increases the total cost. The mortgage must also meet specific qualification and property rules set by lenders and insurers.
Why this matters:
A smaller down payment can make homeownership possible sooner, but it increases total borrowing cost. Understanding high-ratio rules helps buyers budget accurately and avoid surprises.
Related Mortgage Terms
Often confused with:
Conventional Mortgage — Conventional is 20%+ down and typically doesn’t require default insurance.
Closely related:
Down Payment — Determines whether the mortgage is high-ratio.
Debt Service Ratio — Still affects qualification even with insurance.
Next step:
Conventional Mortgage — Compare the costs and flexibility when you reach 20% down.