A buyer is looking to purchase a home for $800,000 in Vancouver. They have saved a down payment of $100,000. Which of the following statements regarding their mortgage situation is true?

Question: A buyer is looking to purchase a home for $800,000 in Vancouver. They have saved a down payment of $100,000. Which of the following statements regarding their mortgage situation is true?

Answer options:

• This mortgage will automatically be a conventional mortgage as the LTV is below 80%. ✅ They will require mortgage loan insurance, such as from CMHC, as their down payment is less than 20%.
• The buyer will be unable to obtain a mortgage with only a $100,000 down payment on an $800,000 home.
• The mortgage stress test will not apply to this loan amount because it is a first-time home buyer.

Correct answer: They will require mortgage loan insurance, such as from CMHC, as their down payment is less than 20%.

Explanation: A mortgage is considered 'high-ratio' and requires mortgage loan insurance if the loan-to-value (LTV) ratio is greater than 80%, meaning the down payment is less than 20% of the purchase price, as per B-20 guidelines.