What Is a High Ratio Mortgage in Canada?

If you’ve been house hunting or talking to a mortgage broker (hi, that’s me!), you’ve probably heard the term “high ratio mortgage” thrown around. But what is a high ratio mortgage in Canada, exactly—and why should you care?

Whether you're buying your first home or upgrading to something new, this is one of those mortgage terms that can seriously affect your approval process, your monthly payment, and even the kind of home you can afford. So, let’s break it all down, without the jargon.

What Is a High Ratio Mortgage in Canada—and How Does It Work?

A high ratio mortgage in Canada means you’re buying a home with less than 20% down. Pretty straightforward, right?

But here’s where it gets a little more detailed. In Canada, if your down payment is under 20%, your mortgage is considered high ratio, and you’re required to get mortgage default insurance (a.k.a. CMHC insurance). This protects the lender if you default on your mortgage. It doesn’t protect you—it’s for the lender’s security—but it’s what makes low-down-payment homebuying possible in the first place.

So, if you’re putting 5%, 10%, or 15% down, you’re getting a high ratio mortgage. And yes, that default insurance premium is added to your mortgage total unless you choose to pay it upfront.

How Much Is the Insurance on a High Ratio Mortgage?

It depends on how much you’re putting down. Here’s the breakdown as of 2025:

• 5% down: You’ll pay 4.00% of the mortgage amount as an insurance premium

• 10% down: The premium drops to 3.10%

• 15% down: It goes down again to 2.80%

  
  

The less you put down, the more mortgage default insurance you’ll pay. It’s tiered, so every little bit of extra down payment can save you money on premiums.

Let’s be real: nobody loves paying insurance premiums, but here’s the bright side—this system is what allows Canadians to buy homes with 5% down. Without it, many buyers (especially first-timers) would be completely priced out of the market.

Do You Always Need 20% Down in Canada?

Nope! That’s one of the most common mortgage myths I hear.

If your purchase price is under $1.5 million, the minimum down payment is:

• 5% on the first $500,000

• 10% on the amount between $500,000 and $1,499,999

  
  

So, let’s say you’re buying a $700,000 home. You’d need 5% on the first $500,000 ($25,000) and 10% on the remaining $200,000 ($20,000). That’s a total of $45,000, which is just under 6.5% of the total purchase price.

If you’re buying a home over $1.5 million, or a rental property, the minimum down is 20%—and yes, that would be considered a conventional mortgage, not a high ratio one.

Is a High Ratio Mortgage Bad?

Not at all. It just means you're using mortgage default insurance to buy with a smaller down payment. For a lot of people—especially first-time buyers or folks in expensive markets—this is how they get into homeownership.

In fact, in some cases, high ratio mortgages come with lower interest rates than conventional ones. Why? Because the lender’s risk is reduced thanks to the insurance.

So, while you’re paying a premium for that default insurance, you might save on rate. It’s not always a better or worse scenario—it’s just about what works best for your situation.

Can You Refinance a High Ratio Mortgage?

Not exactly.

To refinance your mortgage (i.e., increase the amount or pull equity out), you need to have at least 20% equity in your home. That means you’d need a conventional mortgage to do a full refinance.

If you started out with a high ratio mortgage and have built up equity through mortgage payments and rising property value, you may now qualify to refinance—but it depends on your current loan-to-value (LTV) ratio.

What Happens If My Down Payment Is a Gift?

Gifted down payments are totally allowed in high ratio mortgage scenarios—as long as the gift is from an immediate family member, is non-repayable, and there’s a signed gift letter. Lenders will want to see that the funds are in your account before closing, usually at least 15 days prior.

If you're planning on using gifted funds and buying with less than 20% down, I always recommend looping your mortgage broker in early. We’ll help make sure everything is documented properly so there are no last-minute surprises.

Final Thoughts: What Is a High Ratio Mortgage in Canada—and Should You Get One?

In short: A high ratio mortgage in Canada is one where you’re putting less than 20% down, and you’ll need mortgage default insurance to make it happen.

It’s not a bad thing. In fact, it’s what gets many people into homes sooner than they thought possible. But it does come with some extra costs and rules—so it’s important to understand how it works and what options are available to you.

Not sure whether a high ratio mortgage makes sense for your situation? Let’s chat. I’ll walk you through your numbers, help you weigh the pros and cons, and find the mortgage strategy that actually makes sense for you—not just the one that shows up in a Google search.

Let's Chat!

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