Tom Brothers Financial Inc.

In the Toronto market, the size of your down payment does more than just affect your monthly bill, it determines which "category" of mortgage you fall into.

Understanding the difference between High-Ratio and Conventional mortgages is a key step in your GTA home-buying journey. 🏠

High-Ratio (Insured) Mortgages
If your down payment is less than 20%, you have a high-ratio mortgage.

• The Catch: You must pay for mortgage default insurance (like CMHC). This premium is usually rolled into your loan.
• The Perk: Because the lender is protected by insurance, you often qualify for lower interest rates than conventional borrowers.

Conventional (Uninsured) Mortgages
When you put down 20% or more, your mortgage is considered conventional.

• The Catch: Interest rates can be slightly higher because the lender takes on more risk without federal insurance.
• The Perk: You avoid insurance premiums entirely, saving you thousands up front. You also gain flexibility, such as the ability to extend your amortization to 30 years to lower your monthly payments.

Deciding which path to take depends on your cash flow and how quickly you want to enter the market. ⚖️

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