A homebuyer is approved for a new mortgage by their financial institution. The lender requires the purchase of mortgage loan insurance. Given the federal mortgage rules (B-20 guidelines), what is the maximum permissible Loan-to-Value (LTV) ratio for this insured loan on a conventional home purchase?

Question: A homebuyer is approved for a new mortgage by their financial institution. The lender requires the purchase of mortgage loan insurance. Given the federal mortgage rules (B-20 guidelines), what is the maximum permissible Loan-to-Value (LTV) ratio for this insured loan on a conventional home purchase?

Answer options:

• 75% LTV, requiring a minimum 25% down payment.
• 80% LTV, requiring a minimum 20% down payment.
• 90% LTV, requiring a minimum 10% down payment. ✅ 95% LTV, requiring a minimum 5% down payment.

Correct answer: 95% LTV, requiring a minimum 5% down payment.

Explanation: Under CMHC and other mortgage loan insurers' guidelines, the minimum down payment for an insured mortgage (high-ratio mortgage) on a conventional home purchase is generally 5% for properties under $500,000, and increasing for more expensive homes, resulting in a maximum LTV of 95%.