A borrower, Carlos, is seeking to obtain a mortgage for a mixed-use commercial and residential property in Waterloo, where the commercial component represents 60% of the total square footage. Carlos requires mortgage default insurance for a high-ratio mortgage. Which statement is accurate regarding the eligibility of this property for standard mortgage default insurance?

Question: A borrower, Carlos, is seeking to obtain a mortgage for a mixed-use commercial and residential property in Waterloo, where the commercial component represents 60% of the total square footage. Carlos requires mortgage default insurance for a high-ratio mortgage. Which statement is accurate regarding the eligibility of this property for standard mortgage default insurance?

Answer options:

• The property is eligible for standard mortgage default insurance because it includes a residential component. ✅ The property is ineligible for standard mortgage default insurance due to the significant commercial component.
• The property would be eligible if the commercial component was generating sufficient rental income to cover the mortgage.
• Mortgage default insurance would be available if Carlos occupied the residential portion as his primary residence.

Correct answer: The property is ineligible for standard mortgage default insurance due to the significant commercial component.

Explanation: CMHC, Sagen, and Canada Guaranty typically only insure residential properties (1-4 units). Mixed-use properties are generally ineligible for standard high-ratio mortgage default insurance if the commercial component is significant, usually exceeding a certain percentage (e.g., typically 50% or more of habitable space) or if the property is not primarily residential in nature.