What is a High-Ratio Mortgage In Canada?
Posted by: MonsterMortgage.ca
A high-ratio mortgage applies to people that have less than 20% of a down payment to put towards the purchase of a home. In these cases, you must qualify for mortgage insurance through one of three insurers – Genworth, CMHC or Canada Guaranty
You can qualify for up to 95% of your home’s value based on the following criteria:
Amortization (25 years)
The cost of the insurance premium (a fee) is incorporated into your mortgage payments and varies based on your down payment:
With a down payment of 5% – 9.99% your premium is 2.75% of your mortgage amount
With a down payment of 10% – 14.99% – your premium is 2.00% of your mortgage amount
With a down payment of 15% – 19.99% – your premium is 1.75% of your mortgage amount
The insurance premium is also subject to PST and must be paid at time of closing
How does this benefit consumers?
First time home buyers are the more typical consumer that fall into the “High Ratio Mortgage” category.
High-Ratio mortgages allow first-time home buyers the opportunity to own a home assuming they have good credit and steady income; but do not have a big down payment unavailable.