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High Ratio Mortgage Requirements

What is a High Ratio Mortgage?

A high ratio mortgage is a mortgage that exceeds 80% loan to value. This refers to either a purchase where the purchaser has less than 20% for a down payment or, in a mortgage refinancing scenario, where there is less than 20% equity in the property. A mortgage with more than a 20% down payment is called a conventional mortgage.

Number of Units1-4 units, one of which must be occupied by the owner
1 unit: 95%
Maximum Loan-To-Value Ratio2 units (eg: duplex): 92.50%
(LTV)3 or 4 units: 90%
Qualifying Interest RateThe interest rate used to determine borrower eligibility is determined as follows:
Loan term less than 3 years—the greater of the lender’s 3 year posted rate or the contract rate (or VRM cap).
Loan term 3 years or more—the contract interest rate (or VRM cap).
Standard Variable Rate Mortgage (VRM), regardless of loan term: the lender’s 3 year posted rate.
Maximum Amortization PeriodMaximum amortization period of 25 years.
Minimum Loan Term6 Months
Hi-Ratio Application Fee$185.00
Insurance PremiumsLoan To Value ratioPremium Amount
Up to and incl. 65%0.50%
Up to and incl. 75%0.65%
Up to and incl. 80%1.00%
Up to and incl. 85%1.75%
Up to and incl. 90%2.00%
Up to and incl. 95%3.25%
*Standard Variable Rate Mortgages are subject to a 0.25% surcharge
Minimum EquityMinimum equity of 5% from the borrower’s own resources is required.
Gift down payments from an immediate relative are acceptable and need to be confirmed in a letter from the donor. Gift money needs to be in the borrower’s possession 15 days prior to the closing date.
Lender needs to verify that the borrower’s ability to cover closing costs of at least 1.5% of the purchase price. If the closing costs are to be borrowed, the loan repayment is to be included in the Total Debt Service (TDSR) calculation.
Debt Servicing RatiosGross Debt Service (GDS) ratio: The borrower can commit up to 32% of the gross household income toward the payment of principal + interest + property taxes + heat. For condominiums, this formula includes 50% of condominium fees.
Total Debt Service (TDS) ratio: The borrower can commit up to 40% of gross household income toward housing obligations and other debts.
When the property has one to three rental units in addition to the owner-occupied unit, TDS formula is:
(principal+interest+property taxes+heat + payments on all other debts) X 100
Divided By:
gross household income + up to 50% of confirmed gross rental income
For GDS and TDS calculations, principal and interest payments are calculated on total insured loan amount, including mortgage loan insurance premium where applicable.
Maximum House PriceMaximum house prices apply to LTV’s that are greater than 90%
Previous BankruptMust be discharged a minimum of 2 years with re-established credit. A mortgage broker can assist you in re-establishing your credit.

 

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Real Mortgage Associates is one of South Western Ontario’s leading Mortgage Broker/Mortgage Agent companies, offering seamless solutions to all your mortgage needs. Whether you want to buy a new home, mortgage renewal, consolidate debt, or refinance an existing loan or mortgage, we offer you Real solutions for your unique goals. We offer effective Mortgage solutions for all of Southwestern Ontario including Ayr, Kitchener, Waterloo, Cambridge, Brantford, Paris, Guelph, Hamilton, Milton, Mississauga, Toronto, and cottage country, Barrie, Muskoka, Kawartha, Gravenhurst, Bracebridge, and Huntsville.