September 19, 2020

What is a high-ratio mortgage?

A high-ratio mortgage refers to a mortgage in which the borrower has a down payment between 5% – 20%. These Mortgages require mortgage default insurance.

CMHC, Genworth Financial Canada, Canada Guaranty

The Canadian government, supports high levels of homeownership through an insurance plan that covers lenders in the event that holders of high-ratio mortgages default on their mortgage.

In Canada, there are 3 main suppliers of insurance for high-ratio mortgages:

  1. CMHC. Canada Mortgage and Housing Corporation’s mortgage insurance program allows buyers who have as little as a 5% down payment to secure mortgages at the same rates as those who make a 20% down payment. The mortgage default insurance premium, which is passed on to the borrower, can either be paid up front as a lump sum or be added to the mortgage.
  2. Genworth Financial Canada is a private default insurance provider. As a leading private sector supplier of mortgage default insurance in Canada, Genworth works with lenders to make home ownership more accessible to Canadians.
  3. Canada Guaranty. Established in 2010, Canada Guaranty is a Canadian-owned private mortgage insurance company. Mortgage insurance from Canada Guaranty protects lenders and investors from losses related to borrower default and foreclosure.

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