Understanding CMHC Insurance and High-Ratio Mortgages in Ontario

For many Ontario homebuyers, saving a 20% down payment isn’t realistic right away. That’s where CMHC insurance and high-ratio mortgages come in.

At Centum Chartered Finance, we help clients across Ontario understand how these mortgages work and how to use them strategically when buying a home.

What Is a High-Ratio Mortgage?

A high-ratio mortgage is a mortgage where the down payment is less than 20% of the purchase price.

Because these loans carry a higher risk for lenders, they require mortgage default insurance to protect the lender in case the borrower cannot make payments.

This insurance is provided by:

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

CMHC is the most widely known insurer.

What Is CMHC Insurance?

CMHC insurance protects the lender, not the borrower.
But it allows buyers to enter the housing market with a smaller down payment.

If you buy a home with less than 20% down, CMHC insurance is mandatory.

This allows lenders to approve borrowers who otherwise wouldn’t qualify for traditional uninsured mortgages.

How Much Is CMHC Insurance in Ontario?

The cost of CMHC insurance depends on your down payment amount.

Here’s a simplified breakdown:

Down PaymentCMHC Premium5% – 9.99%4.00%10% – 14.99%3.10%15% – 19.99%2.80%

The premium is added directly to your mortgage (not paid upfront).

Example of How It Works

If you purchase a home for $500,000 with 5% down ($25,000):

• Your mortgage amount: $475,000
• CMHC premium (4%): $19,000
• Total mortgage after insurance: $494,000

This increases your monthly mortgage slightly, but allows you to buy sooner without needing 20% saved.

Benefits of High-Ratio Mortgages

High-ratio mortgages offer several advantages, especially for first-time buyers.

✅ Faster Market Entry

You don’t need to wait years to save 20%.

✅ Lower Interest Rates

Insured mortgages typically qualify for lower interest rates compared to uninsured mortgages.

✅ Accessibility

More Ontarians can qualify for homeownership even with limited savings.

What Are the Drawbacks?

While helpful, high-ratio mortgages also come with:

❗ Added insurance cost
❗ Higher overall borrowing amount
❗ Maximum purchase price limitations
❗ Must meet stricter stress-test guidelines

This is why understanding your full financial picture is important.

Who Should Consider a High-Ratio Mortgage?

High-ratio mortgages are ideal for:

• First-time home buyers
• Buyers with strong income but lower savings
• Those looking to enter the market sooner
• Borrowers who prefer lower upfront costs

At Centum Chartered Finance, we help determine if this route makes sense based on your long-term goals.

How We Help at Centum Chartered Finance

We guide Ontario buyers through:

✔ CMHC and insured mortgage approval
✔ Rate comparisons on insured vs uninsured mortgages
✔ Long-term cost analysis
✔ First-time buyer strategies
✔ Pre-approvals with multiple lenders

Our goal is not just approval — but approval with a plan.

Speak With an Ontario Mortgage Specialist

If you’re considering buying with less than 20% down, we can help you understand your options clearly and professionally.

Centum Chartered Finance
Serving home buyers across Ontario.

Contact us today to schedule your consultation and explore your mortgage solutions.

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