High-Ratio Mortgage

A mortgage is considered a high-ratio mortgage when your down-payment is less than 20% of the home value/purchase price. If you have a high-ratio mortgage, you need Mortgage Default Insurance. This is a hard and fast rule because financial regulations do not permit regulated lenders to have high-ratio mortgages on their balance sheets unless they are insured. If you Default on the mortgage, the insurance will pay the lender for certain covered losses.