What a high-ratio mortgage means in Canada and why a down payment below 20 percent changes the insurance and qualification conversation.
A high-ratio mortgage is a mortgage with a loan-to-value ratio above 80%, which usually means the borrower made a down payment of less than 20% of the purchase price.
High-ratio status changes the financing conversation immediately. It usually means the mortgage needs mortgage default insurance, and it often affects amortization options, lender pricing, and qualifying rules.
In Canadian purchase transactions, a mortgage is usually called high-ratio when the borrower puts less than 20% down. That is different from a conventional mortgage, where the borrower contributes at least 20%.
High-ratio does not mean the borrower is reckless or automatically weak. It is a structural label describing the size of the loan relative to the property’s value.
If you buy a home for $700,000 with a $70,000 down payment, you are borrowing 90% of the purchase price. That is a high-ratio mortgage, so the file normally needs insured financing if it is otherwise eligible.
High-ratio is not the same as subprime. A borrower can have strong income and credit and still have a high-ratio mortgage simply because the down payment is below 20%.
It is also easy to confuse high-ratio with insured mortgage. High-ratio mortgages are usually insured, but “insured” can be used more broadly in lender funding discussions.
Eligibility depends on current insurance rules, purchase price limits, occupancy, and lender policy.