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Jan 22 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:

  • Employment

  • Credit score

  • 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.

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