High-Ratio Mortgage
Quick Summary
A mortgage with less than 20% down payment that requires default insurance.
ELI5 Explanation
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You buy with a small down payment, but you pay for mortgage insurance.
Detailed Explanation
In Canada, putting down less than 20% typically requires mortgage default insurance (often called CMHC insurance, though multiple providers exist). High-ratio mortgages can have competitive interest rates, but you pay an insurance premium that increases total borrowing cost.
Example
A buyer puts 5% down, qualifies as high-ratio, and the insurance premium is added to the mortgage balance.
Why It Matters
It affects qualification rules, total cost, and how much equity you have early on.