Which of the following best describes a conventional mortgage in Canada?
Correct Answer
A) A mortgage with 20% or more down payment
A conventional mortgage requires a down payment of 20% or more of the purchase price, which means the loan-to-value ratio is 80% or less. These mortgages do not require mortgage default insurance, unlike high-ratio mortgages with less than 20% down.
Why This Is the Correct Answer
This answer is correct because a conventional mortgage is one with a down payment of 20% or more of the purchase price, which means a loan-to-value ratio of 80% or less. Federally regulated lenders must have mortgage default insurance on loans above 80% loan-to-value, so a conventional mortgage does not need it and the borrower pays no insurance premium.
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