Conventional and High Ratio Mortgages 

A conventional mortgage is a loan that is not guaranteed or insured by any Mortgage Insurance Companies*.

A conventional mortgage in Canada is a loan for no more than 80% of the appraised value in refinance cases or purchase price of the property.

To qualify for a conventional mortgage, your down payment, or the cash you provide for the purchase price, must be at least 20% of the purchase price, or 80% Loan to Value.

Hi Ratio Mortgage

high-ratio mortgage simply is  A mortgage in which a borrower places a down payment of less than 20% of the purchase price of a property or  A mortgage that exceeds 80% of the property’s appraised value or purchase price, whichever is less.

High ratio mortgages must be insured by mortgage insurance companies* The insurance will protect the bank in the event of a default on the loan.
To insure a mortgage, insurers charge a premium which is usually added on the top of the requested mortgage amount.

If the borrower defaults, the proceeds of the insurance will be paid to the lender, not the borrower.

* Mortgage Insurance Companies offer “mortgage insurance”. Mortgage Insurance (also known as mortgage guarantee and home-loan insurance) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.  here are three different Canadian mortgage insurance providers:

• CMHC.
• Genworth Financial Canada.
• Canada Guaranty.