{"id":88,"date":"2026-02-26T13:33:48","date_gmt":"2026-02-26T13:33:48","guid":{"rendered":"https:\/\/donemortgage.ca\/blogs\/?p=88"},"modified":"2026-03-11T12:59:41","modified_gmt":"2026-03-11T12:59:41","slug":"what-is-a-high-ratio-mortgage-in-canada","status":"publish","type":"post","link":"https:\/\/donemortgage.ca\/blogs\/what-is-a-high-ratio-mortgage-in-canada\/","title":{"rendered":"What Is a High Ratio Mortgage in Canada?"},"content":{"rendered":"\n

Buying a home in Canada doesn\u2019t always require a 20% down payment. In fact, many buyers, especially first-time home buyers in Ontario and the GTA purchase homes with far less.<\/p>\n\n\n\n

If your down payment is less than 20% of the purchase price, your mortgage is considered a high ratio mortgage<\/strong>.<\/p>\n\n\n\n

Here\u2019s what that actually means.<\/p>\n\n\n\n

What Is a High Ratio Mortgage? (Simple Definition)<\/strong><\/h2>\n\n\n\n

A high ratio mortgage is a home loan where the buyer puts down less than 20% of the purchase price. Because the lender is taking on more risk, the mortgage must be insured by a government-backed provider like CMHC<\/a>. The insurance premium is added to the mortgage amount. This allows families to enter the market even if they are currently managing mortgages with bad credit<\/a><\/p>\n\n\n\n

Why Mortgage Insurance Exists<\/strong><\/h2>\n\n\n\n

Banks and lenders don\u2019t want to take on the full risk of default when the borrower has less equity in the property.<\/p>\n\n\n\n

To reduce this risk, the federal government supports mortgage insurance providers such as:<\/p>\n\n\n\n

    \n
  • CMHC (Canada Mortgage and Housing Corporation)
    <\/li>\n\n\n\n
  • Sagen
    <\/li>\n\n\n\n
  • Canada Guaranty
    <\/li>\n<\/ul>\n\n\n\n

    All three serve the same purpose:
    They insure the lender \u2014 not the borrower \u2014 against default.<\/p>\n\n\n\n

    What Does \u201cHigh Ratio\u201d Mean? (Real Numbers Example)<\/strong><\/h2>\n\n\n\n

    Let\u2019s break it down with a simple example:<\/p>\n\n\n\n

    Purchase Price: $1,000,000
    Down Payment: $100,000 (10%)
    Mortgage Amount: $900,000<\/p>\n\n\n\n

    Because the down payment is under 20%, mortgage insurance is required.<\/p>\n\n\n\n

    CMHC Insurance Premium (approx.): $29,700
    Total Mortgage Added to Principal: $929,700<\/p>\n\n\n\n

    That $29,700 premium is rolled into your mortgage \u2014 and interest is paid on it over 25\u201330 years.<\/p>\n\n\n\n

    Minimum Down Payment Rules in Canada (2026)<\/strong><\/h2>\n\n\n\n

    For homes priced:<\/p>\n\n\n\n

      \n
    • Under $500,000 \u2192 Minimum 5% down
      <\/li>\n\n\n\n
    • $500,000 to $1,499,999 \u2192 5% on first $500k + 10% on remaining
      <\/li>\n\n\n\n
    • $1.5M+ \u2192 Minimum 20% down (insurance not allowed)
      <\/li>\n<\/ul>\n\n\n\n

      So yes \u2014 you can legally purchase a home under $1.5M with less than 20% down.<\/p>\n\n\n\n

      Real Scenario: 5% vs 10% vs 15% Down<\/strong><\/h2>\n\n\n\n

      Let\u2019s compare the impact:<\/p>\n\n\n\n

      Scenario 1 \u2013 5% Down<\/strong><\/td>Scenario 2 \u2013 10% Down<\/strong><\/td>Scenario 3 \u2013 15% Down<\/strong><\/td><\/tr>
      Purchase Price: $1,000,000
      Down Payment: $50,000
      Mortgage: $950,000
      Insurance Premium: ~$39,900
      Total Mortgage: ~$989,900<\/td>      		Down Payment: $100,000
      Mortgage: $900,000
      Insurance Premium: ~$29,700
      Total Mortgage: ~$929,700<\/td>      		Down Payment: $150,000
      Mortgage: $850,000
      Insurance Premium: ~$25,500
      Total Mortgage: ~$875,500<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      The lower the down payment, the higher the insurance premium percentage.<\/p>\n\n\n\n

      Common Mistakes Borrowers Make<\/strong><\/h2>\n\n\n\n
        \n
      1. Not realizing the insurance premium increases their mortgage from day one
        <\/li>\n\n\n\n
      2. Not understanding they pay interest on that premium
        <\/li>\n\n\n\n
      3. Focusing only on qualifying \u2014 not long-term cost
        <\/li>\n\n\n\n
      4. Ignoring total ownership costs (closing costs, property taxes, maintenance)
        <\/li>\n<\/ol>\n\n\n\n

        Many first-time buyers in Toronto and Brampton don\u2019t realize closing costs can add another 3\u20134% of the purchase price.<\/p>\n\n\n\n

        Pros of a High Ratio Mortgage<\/strong><\/h2>\n\n\n\n