Youssef KobbiHigh Ratio Mortgages in Canada: CMHC vs Collateral Loans
Summary: 🏦 What Is a High Ratio Mortgage?
High ratio mortgages apply to real estate loans with a loan-to-value (LTV) over 80%. In Canada, they generally require mortgage insurance or must be backed by strong collateral. This article compares two primary structures: CMHC-insured high ratio loans and collateral mortgages offered by private lenders. You’ll learn the definitions, pros and cons, documentation, and when each structure is most appropriate for your multifamily project. A high ratio mortgage is a loan with an LTV exceeding 80%. Because lenders take on more risk with higher LTVs, this type of financing typically requires mortgage default insurance (via CMHC or private insurers), or is structured with robust collateral protection. High ratio mortgages are common in:- Multifamily acquisition with low equity
- Value-add or repositioning plays
- First-time sponsors or emerging investors
1️⃣ CMHC-Insured High Ratio Mortgages
✅ Definition
Offered through Canada Mortgage and Housing Corporation or private insurers like Sagen, these loans are designed to maximize leverage (up to 95%) while offering long amortizations (up to 50 years under MLI Select).🟩 Pros vs. Cons: CMHC-Insured Loans
| Pros | Cons |
| Up to 95% LTV possible | High insurance premiums (up to 6.5%+) |
| Amortizations up to 50 years (MLI Select) | Strict ESG & affordability requirements |
| Lower interest rates than uninsured loans | Slower underwriting (60–120 days typical) |
📄 Requirements
- MLI Select scoring (affordability, energy, accessibility)
- Rent rolls, pro formasBorrower financials, corporate resolution
- Appraisal and environmental reports
📊 Example – CMHC Loan (95% LTV on $5.5M Asset)
| Component | Value |
| Down Payment | $275K (5%) |
| Loan Amount | $5.225M |
| Amortization | Up to 50 years |
| Premium (6.5%) | ~$339,625 |
2️⃣ Collateral-Based High Ratio Mortgages (Private Lending)
✅ Definition
In cases where borrowers need speed or don’t qualify for CMHC, a collateral mortgage can be structured by private lenders. These loans are based on the strength of the asset, personal guarantees, or additional security (like a second property).🟦 Pros vs. Cons: Collateral-Based High Ratio Loans
| Pros | Cons |
| Fast closings | Higher interest rates (8%–12%+) |
| Flexible underwriting | Shorter terms (6–24 months) |
| No ESG or affordability requirements | Strong exit strategy required |
| Can layer with bridge or second mortgages |
- Purchase & Sale Agreement
- Appraisal
- Rent roll and borrower ID
- Clear Exit strategy (refinance, sale, CMHC)
🧾 Example – Private Collateral Mortgage
| Component | Value |
| Loan Amount | $5.225M (95% LTV) |
| Rate | 9.5% interest-only |
| Term | 12 months |
| Exit | CMHC takeout or sale |
🧮 Comparison Table: CMHC vs Collateral High Ratio Mortgages
| Feature / Factor | CMHC-Insured High Ratio Loan | Collateral-Based High Ratio Loan |
| LTV Max | Up to 95% | It can even be 100% (case-by-case) |
| Amortization | Up to 50 years (MLI Select) | Typically 6–24 months |
| Approval Time | 60–120 days | 20–30 business days |
| Interest Rate | Lower (insured) | Higher (8%–12%+) |
| Insurance Premium | 5%–7% of loan amount | None |
| Requirements | ESG scoring, CMHC docs | Appraisal, exit strategy, borrower personal financials |
| Best For | Long-term holds, ESG-aligned developments | Fast closings, repositioning, non-bankable deals |
🔚 Conclusion: Which High Ratio Option Is Right for You?
If you want the best terms and can meet CMHC’s ESG targets, CMHC-insured high ratio financing is ideal. But if you need fast capital or don’t qualify under MLI Select, a collateral-backed private mortgage can bridge the gap. Always model both options before deciding. 📌 Talk to our capital experts to compare your options.❓ FAQ – High Ratio Mortgages
What qualifies as a high ratio mortgage? Any mortgage where the loan-to-value (LTV) exceeds 80%. Do all high ratio mortgages require CMHC insurance? Yes, if from institutional lenders. Private lenders may offer collateral-based alternatives. What’s the insurance premium for CMHC in 2025? Between 5%–7% of the loan amount, depending on LTV and MLI Select scoring. Are high ratio mortgages only for first-time buyers? No. Many commercial investors and developers use them to reduce upfront equity. Can I refinance a private high ratio mortgage into CMHC? Yes. Many use private loans short-term, then exit via CMHC-insured refinance.🔗 External Resources
- CMHC – MLI Select Program
- OSFI Lending Regulations
- Mortgage Professionals Canada
- https://www.truenorthmortgage.ca/blog/why-a-bigger-down-payment-can-result-in-a-higher-rate
- https://www.ratehub.ca/mortgages/insured-insurable-uninsured-mortgage
- https://www.nesto.ca/mortgage-basics/what-is-a-high-ratio-mortgage/
- https://www.mpamag.com/ca/mortgage-industry/guides/navigating-high-ratio-mortgages-in-canada-essential-insights-for-your-clients/525648
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