While it is possible to buy a home with as little as 5% down, the amount of your downpayment will determine whether you'll have a conventional mortgage or an insured, high-ratio mortgage.

What's the difference?

Conventional mortgage: means your downpayment is at least 20% of the purchase price.
High-ratio mortgage: means your downpayment is less than 20% of the purchase price.

High ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada and require you to pay an insurance premium.

The insurance premium:

Will depend on the amount you are borrowing and the percentage of your downpayment (typically the premium is up to 2.75% of your total mortgage amount)
Can be added to the principal balance and paid off as part of your mortgage, or paid off in a lump sum at the time of purchase

The information in this article is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual.

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