When buying a home, a mortgage is often used to help with financing the purchase. The total funds required to buy your new home are typically comprised of a down payment — funds you have saved or are gifted by family, and money loaned by a bank or other financial institution. There are two common types of mortgages — conventional and high-ratio.
A conventional mortgage applies when the amount of money borrowed does not exceed 80% of the value your home. For example, if you purchase a home that is valued at $400,000, your mortgage will not be more than $320,000 and your total down payment, is more than $80,000.
Your mortgage is high ratio when the amount borrowed is more than 80% of the value your home. In this scenario, you are required to have your mortgage insured. The one-time premium for this insurance varies based on the amount of your mortgage and the total mortgage-to-price ratio. Current mortgage insurance premium rates are available online from Genworth Canada and Canada Mortgage of Housing Corporation.