Conventional Mortgages: Under a conventional mortgage, a lender will normally provide up to 75% of the appraised value or purchase price of a property, whichever is less. You must be able to provide at least 25% of the financing on your own.
Example:
| Purchase Price: Conventional Mortgage: Required Down Payment: |
$ 200,000. $ 150,000. $ 50,000. |
High Ratio or Insured Mortgage: A high ratio mortgage finances a higher percentage - up to
90% - of the appraised value or purchase price of the property, whichever is less. This
type of mortgage must, by law, be insured against non-payment by either the Canada
Mortgage and Housing Corporation (CMHC) or the Mortgage Insurance Company of Canada
(MICC). Mortgage insurance protects the lender against loss if the borrower fails to meet
the repayment terms. The application fee (approximately $75) and insurance premium
(approximately 0.5% to 2.5% of the loan) are paid by the borrower. The higher the ratio of
mortgage to down payment, the higher the cost of insurance. Mortgage insurance may be
subject to provincial sales tax.
Example:
| Purchase Price: Down Payment Available: Assuming insurance premium of 2.5% Amount of Mortgage: Assuming Mortgage Rate of 8% |
$ 200,000. |
