Conventional vs. High-Ratio Mortgage in Canada (2026)

The size of your down payment puts your mortgage into one of two camps — conventional or high-ratio — and that label affects your rate, your insurance costs, and even which homes you can buy. Here's the difference, and the counterintuitive truth about which one is cheaper. See down payment rules.

The short answer

A high-ratio mortgage is one where you put down less than 20%; it must carry mortgage default insurance. A conventional mortgage is one where you put down 20% or more; no insurance is required. Surprisingly, high-ratio insured mortgages often get the lowest rates, because the insurance protects the lender.

High-ratio mortgages (less than 20% down)

If your down payment is under 20%, you have a high-ratio mortgage and must buy default insurance from CMHC, Sagen, or Canada Guaranty. The premium is a percentage of the loan (rising as your down payment shrinks) and is usually added to your mortgage and paid off over time. Key rules in 2026:

• Minimum down payment is 5% on the first $500,000 of price, and 10% on the portion from $500,000 to $1.5 million.
• Insured mortgages are available on homes priced under $1.5 million.
• The home must be owner-occupied (not a rental).

Learn what the premium actually buys in CMHC mortgage default insurance explained.

Conventional mortgages (20% or more down)

Put down 20% or more and you skip default insurance entirely — saving thousands in premiums. Conventional mortgages are required for:

• Homes priced at $1.5 million or more (not insurable).
• Most rental and investment properties (financing a rental property).
• Amortizations beyond 25 years for buyers who don't qualify for the insured exceptions.

The counterintuitive part: insured can be cheaper

Because mortgage default insurance protects the lender against loss, insured high-ratio mortgages are lower risk for the lender — so they often come with the lowest advertised rates. A conventional borrower with exactly 20% down sometimes pays a slightly higher rate than a high-ratio borrower with 5% down. The trade-off: the high-ratio borrower paid an insurance premium to get there. Over the full term, more down payment almost always wins, but the rate gap surprises people.

Which one is right for you?

• Buy sooner with less down (high-ratio) if waiting to save 20% means years of rising prices and rent. Getting into the market can outweigh the premium.
• Go conventional if you have 20%+, want to avoid the premium, are buying above $1.5M, or are buying a rental.
• Somewhere between? Run both — sometimes putting down exactly enough to stay high-ratio and keeping cash for renovations or reserves is the smarter play.

A broker can model both side by side. See the bigger affordability picture in how much mortgage you can afford.

Frequently asked questions

Is a high-ratio mortgage bad?

Not at all — it simply means less than 20% down plus default insurance. Many first-time buyers use high-ratio mortgages, and they often come with the lowest rates. The main cost is the one-time insurance premium.

Why do high-ratio mortgages sometimes have lower rates?

Because the mortgage is insured, the lender's risk of loss is covered, so they offer a better rate. A conventional (uninsured) mortgage carries more lender risk and can price slightly higher, even with a bigger down payment.

Can I avoid CMHC insurance?

Yes — put down 20% or more and your mortgage is conventional with no default insurance required. You'll save the premium, though your rate may be marginally higher than an insured equivalent.

What happens if I'm buying a home over $1.5 million?

Homes priced at $1.5 million or more can't be insured, so you need at least 20% down and a conventional mortgage. For higher-value purchases, see luxury home mortgages.

Not sure which side of the 20% line to land on? We'll compare insured and conventional scenarios with real numbers for your purchase. Explore your options or get pre-approved.