HIGH-RATIO VS. CONVENTIONAL — WHAT’S THE REAL DIFFERENCE?

Understanding how lenders calculate “loan-to-value” is one of the biggest keys to qualifying smoothly — and getting the best rates available.

See why your down payment size determines everything from insurance requirements to lender rules 👇

📌 WHAT HIGH-RATIO & CONVENTIONAL REALLY MEAN

Your mortgage type is determined by one simple ratio: 

Loan Amount ÷ Property Value

This percentage drives insurance requirements, lender rules, and interest rates.

1️⃣ HIGH-RATIO MORTGAGE 

A high-ratio mortgage means your down payment is under 20%. 

Because of the higher risk to the lender: 

- Mortgage default insurance is mandatory 

- Premium is added to the mortgage amount 

- Borrowing is capped at 95% loan-to-value 

- Qualification rules are stricter 

- Property type restrictions may apply 

High-ratio = less equity, more lender protection. 

2️⃣ CONVENTIONAL MORTGAGE 

A conventional mortgage means you have 20%+ equity. 

This usually gives you: 

- No mandatory insurance premium 

- Greater flexibility with lender choice 

- Easier approval for rentals/second homes 

- Access to larger refinance options 

- Ability to structure longer amortizations 

Conventional = more equity, more flexibility. 

3️⃣ HOW LENDERS LOOK AT LOAN-TO-VALUE 

The higher your LTV, the more restrictive lenders become. 

Here’s what lenders consider: 

- Down payment size 

- Property type (condo, detached, rural, rental) 

- Appraisal value 

- Market stability 

- Long-term resale/marketability 

The LTV tells lenders exactly what they’re risking financially — which affects approval and rates. 

4️⃣ WHY THIS MATTERS FOR REFINANCES 

Even if you have strong income and credit, lenders cannot refinance you above 80% loan-to-value in Canada.

If you have less than 20% equity, refinancing or tapping into equity simply isn’t allowed.

This rule alone surprises thousands of homeowners every year. 

5️⃣ RATE DIFFERENCES YOU SHOULD EXPECT 

Lenders often price mortgages differently depending on LTV:

- High-ratio: lower rates (because insurer reduces lender risk) 

- Conventional: slightly higher rates 

- Uninsurable: highest rates (refinances, rentals, 30-year amortization, homes >$1M)

Your mortgage category has a direct impact on the rate you get — even when your credit and income are excellent. 

💬 FINAL THOUGHT 

Knowing whether your mortgage is high-ratio or conventional helps you plan properly, avoid costly surprises, and choose the right timing for refinancing or upgrading.

If you want us to calculate your loan-to-value and show all available lender options, message The Frontline Mortgage Group — we’ll run the numbers for free.