5% Downpayment Only

(December 13, 2011 )

In the current market, a regular conventional mortgage from a bank has a maximum financing ratio of 80% for the lower of the purchase price or appraised property value. 

Purchase Price       $500,000 x 80% = $400,000
Appraised Value      $490,000 x 80% = $392,000

In the above example, the bank will only lend a maximum mortgage amount of $392,000.  The bank will review your income and credit history to qualify you for any mortgage amount. 

If you do not have the required downpayment, and wish to purchase a home with less than a 20% down payment, you can still apply for a mortgage with the bank.

The Government of Canada will require the mortgage to be insured.  This means you will need to pay a one time insurance premium that protects banks and lending institutions from mortgage default.  These types of mortgages are commonly referred to as high ratio mortgages and can go up to 95% financing.

Canada Mortgage and Housing Corporation (CMHC), and Genworth Financial Canada (GE) are the 2 main providers for mortgage default insurance in Canada.  Their websites are provided below.  You can ask our team for further details.