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A high-ratio mortgage is one where the down payment is less than 20% of the purchase price, meaning the loan-to-value ratio exceeds 80% — which requires mortgage default insurance in Canada.
The line is drawn at the loan-to-value (LTV) ratio: any mortgage above 80% LTV — a down payment under 20% — is high-ratio and must carry mortgage default insurance from CMHC, Sagen, or Canada Guaranty before a federally regulated lender can fund it.
High-ratio status isn’t optional once the down payment falls below 20% — it’s a legal requirement for federally regulated lenders, and it comes with its own rulebook: a purchase price cap, GDS/TDS ceilings, and amortization limits that don’t apply the same way to a conventional mortgage.
LTV = Mortgage loan amount ÷ Property value × 100
Insurance is mandatory, not optional: any down payment under 20% requires mortgage default insurance from CMHC, Sagen, or Canada Guaranty on a federally regulated lender’s books.
Price cap applies: insured (high-ratio) purchases are capped at a $1.5 million purchase price, effective December 15, 2024 (raised from $1 million).
Tighter ratios, longer amortization option: high-ratio files must meet a maximum GDS of 39% and TDS of 44%, and generally use a 25-year amortization — though first-time buyers and buyers of new builds can qualify for 30 years under the December 2024 reforms.
Minimum down payment sets the floor: the required minimum is 5% of the first $500,000 of the purchase price plus 10% of the portion between $500,000 and $1.5 million.
A buyer purchases a home for $650,000 with the minimum required down payment:
$610,000 ÷ $650,000 = 93.8%. The down payment is only 6.2% of the price, well under 20%, so the file needs mortgage default insurance from CMHC, Sagen, or Canada Guaranty.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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