Ontario Real Estate Licensing Exam Practice · Question
A buyer is purchasing a home in Ottawa for $600,000 with a 15% down payment. Their lender requires mortgage loan insurance. Which of the following is true regarding this borrower's situation?
A mortgage loan is considered high-ratio (or insurable) if the down payment is less than 20% of the purchase price, thus requiring mortgage loan insurance as pe
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Question: A buyer is purchasing a home in Ottawa for $600,000 with a 15% down payment. Their lender requires mortgage loan insurance. Which of the following is true regarding this borrower's situation?
Answer options: ✅ The borrower will require high-ratio mortgage insurance through an insurer like CMHC.
- The borrower will qualify for a conventional mortgage without needing insurance.
- The borrower must make a minimum 20% down payment to avoid mortgage insurance.
- The mortgage stress test will not apply to this uninsured mortgage.
Correct answer: The borrower will require high-ratio mortgage insurance through an insurer like CMHC.
Explanation: A mortgage loan is considered high-ratio (or insurable) if the down payment is less than 20% of the purchase price, thus requiring mortgage loan insurance as per federal regulations.
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