Buying a home is one of the most significant financial decisions you’ll make in your life. Whether you’re a first-time homebuyer or upgrading to your next property, understanding mortgage types is crucial. One term that often comes up in the Canadian real estate market is “high ratio mortgage.” But what exactly does it mean, and how does it affect your home financing journey?

As a trusted Mortgage Agent near you in Saskatoon, I’m here to help demystify high ratio mortgages and guide you toward the right choice for your financial future.

Understanding High Ratio Mortgages

A high ratio mortgage refers to a home loan where the borrower makes a down payment of less than 20% of the property’s purchase price. Because the loan-to-value ratio (LTV) is higher, lenders consider this type of mortgage riskier compared to a conventional mortgage (which has a down payment of 20% or more).

In Canada, when your down payment is less than 20%, mortgage insurance is mandatory. This insurance protects the lender in case you default on your loan.

Why Do Buyers Opt for a High Ratio Mortgage?

Many homebuyers, especially first-time buyers, may not have the savings to afford a 20% down payment. With rising home prices in cities like Saskatoon, saving that much can be challenging.

Here’s where a high ratio mortgage becomes helpful:

• Lower upfront cost: You can purchase your dream home sooner without waiting to save 20%.
• Access to better homes: Allows you to consider more options within your budget.
• Stable monthly payments: With today’s competitive interest rates, you can manage monthly payments affordably.

As your Mortgage Associate in Saskatoon, I can help assess your financial situation and determine if a high ratio mortgage is suitable for you.

What Is Mortgage Default Insurance?

When you apply for a high ratio mortgage in Canada, mortgage default insurance is required. It’s typically provided by one of three institutions:

• CMHC (Canada Mortgage and Housing Corporation)
• Genworth Canada
• Canada Guaranty

This insurance does not protect the borrower — it protects the lender in case you default. However, it does offer benefits to you too, such as:

• Easier access to mortgage financing
• Potentially better interest rates
• Lower risk perception by lenders

The premium for this insurance is calculated as a percentage of the mortgage amount and can be added to your total mortgage or paid upfront.

How Is the High Ratio Mortgage Calculated?

Let’s take a quick example.

If you’re buying a home for $400,000 and you put $40,000 (10%) as your down payment, the mortgage required is $360,000. Since your down payment is less than 20%, this is classified as a high ratio mortgage, and insurance will be required.

As a Mortgage Specialist in Saskatoon, I’ll help you calculate the exact insurance premium and total monthly payment so you’re not caught off-guard.

Pros and Cons of High Ratio Mortgages

✅ Advantages

• Buy a home sooner with a smaller down payment
• Lock in lower interest rates with insured mortgages
• Flexibility in housing choices

⚠️ Disadvantages

• Mandatory mortgage insurance premium
• Higher total cost over the life of the mortgage
• Stricter approval process due to federal mortgage stress tests

How I Can Help as Your Local Mortgage Agent Near You

As a licensed Mortgage Associate at Akal Mortgages Inc., I’ve helped hundreds of families in Saskatoon and surrounding areas navigate the complexities of mortgages. Whether you’re exploring a high ratio or conventional mortgage, I provide:

• Free mortgage consultations
• Customized loan strategies
• Access to multiple lenders for the best rates
• Clear, honest advice — always in your best interest

Is a High Ratio Mortgage Right for You?

Choosing a mortgage isn’t just about interest rates — it’s about long-term stability and comfort. High ratio mortgages can be a great option, especially for buyers eager to enter the market sooner.

However, it’s essential to:

• Understand the true cost of insurance
• Plan for future income stability
• Ensure you’re working with a trusted mortgage specialist in Saskatoon

That’s where I come in.

Final Thoughts

If you’re thinking about purchasing a home with less than 20% down, a high ratio mortgage may be the key to getting the keys to your new home. While it does come with insurance requirements, it offers the flexibility and opportunity many buyers need in today’s competitive housing market.

Let me, Vishal Monga, your reliable Mortgage Agent near you, help make the process smooth, informed, and personalized. With the right guidance, owning your dream home is closer than you think.