A self-employed borrower wants a mortgage from a federally regulated bank without mortgage default insurance. Under the Bank Act, the insurance requirement applies when the down payment is less than what share of the property's value?
Correct Answer
B) 20%
Bank Act s. 418(1) bars a bank from lending more than 80% of a residential property's value unless the excess is insured or guaranteed. A loan above 80% means a down payment below 20%, so 20% down is the threshold that removes the legal requirement for insurance. Individual lenders may still set stricter terms for self-employed borrowers.
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