Two words come up early in every purchase conversation: conventional and high-ratio. They describe the same mortgage on the same house. What changes is the size of your down payment, and with it whether the lender needs default insurance on the loan.
What separates the two
- A conventional mortgage starts once your down payment reaches a set threshold, which lets you skip mandatory default insurance.
- A high-ratio mortgage is built for buyers with a smaller down payment. It needs mortgage default insurance, and that insurance is what opens the door to prime lenders for you.
- Insured mortgages often give you access to the rates lenders reserve for insured files, but they cap how much you can borrow and can add approval steps.
- The type you land in affects more than the rate and the premium. It also decides which repayment timelines and which lenders you qualify for.
- Your credit score and overall financial profile carry a lot of weight in the approval, especially on high-ratio and insured files.
- Incentive programs and provincial rebates can ease upfront costs for eligible first-time buyers, and many of them connect to the insured mortgage rules.
Where to go from here
The trade-offs depend on your down payment size, so the honest answer is "it depends on your numbers". Start with down payments in Ontario for how the tiers work, run the closing costs calculator to see the insurance premium and land transfer tax in cash terms, and when you are ready, a pre-approval shows you exactly which products fit your file.
This article is general information, not financial advice, and quotes no rates. Your situation may differ; speak with a licensed mortgage professional.