What is a High Ratio Mortgage?
April 01 2026
In Canada, a high-ratio mortgage is any mortgage where your down payment is less than 20% of the home's purchase price.
Because you are putting down a smaller amount, the loan-to-value (LTV) ratio is "high" (over 80%). Under Canadian federal law, these mortgages must be protected by mortgage default insurance (commonly known as CMHC insurance).
Key Characteristics of High-Ratio Mortgages
- Mortgage Default Insurance: You are required to pay an insurance premium to one of Canada's three insurers: CMHC, Sagen, or Canada Guaranty. This insurance protects the lender if you default, not you.
- The Premium: The cost (usually 2.8% to 4.0% of the loan amount) is typically added to your mortgage balance rather than paid upfront in cash.
- Lower Interest Rates: Surprisingly, high-ratio mortgages often have lower interest rates than conventional mortgages. This is because the insurance makes the loan virtually risk-free for the bank.
- Maximum Purchase Price: As of 2026, the price cap for an insured high-ratio mortgage is $1.5 million. If the home costs more than this, you must put down at least 20%.
Down Payment & Amortization Rules (2026 Updates)
The rules for high-ratio mortgages were significantly updated in late 2024 and 2025 to improve affordability. Here is how they stand today:
| Feature | Requirement/Rule |
|---|---|
| Minimum Down Payment | 5% on the first $500K; 10% on the portion above $500K |
| Standard Amortization | 25 years for most buyers |
| 30-Year Amortization | Available only for all first-time home buyers or anyone purchasing a newly built home. |
| Credit Score | Typically requires a minimum score of 630 to qualify for insurance. |
High-Ratio vs. Conventional
| High Ratio Mortgage | Conventional Mortgage | |
|---|---|---|
| Down Payment | 5% to 19.99% | 20% or more |
| Default Insurance | Required (and added to mortgage) | Not Required |
| Typical Rate | Usually Lower | Usually Slightly Higher |
| Mox Purchase Price | $1.5 Million | No Limit |
Pro-Tip: If you are sitting on a 19% down payment, it’s often worth doing the math on whether to stay "High-Ratio." Sometimes the lower interest rate you get on an insured mortgage saves you more over five years than the cost of the insurance premium itself!
