Loan-to-Value (LTV) Ratio
Also known as: LTV · Loan-to-Value · Loan-to-Value (LTV) · LTV ratio
The mortgage loan amount divided by the lower of the purchase price or the appraised property value; the threshold that determines whether default mortgage insurance is required (above 80% LTV in Canada).
Loan-to-Value (LTV) is the central ratio in Canadian mortgage underwriting. It is calculated as the mortgage loan amount divided by the lower of (a) the purchase price or (b) the appraised value of the property, expressed as a percentage. The 80% LTV line — equivalent to a 20% down payment — is the statutory threshold above which default mortgage insurance is required under the Bank Act and the Insurance Companies Act. Mortgages above 80% LTV ("high-ratio") must be insured by CMHC, Sagen, or Canada Guaranty; mortgages at or below 80% LTV ("conventional") can proceed without insurance.
The CMHC premium schedule is LTV-banded — higher LTV brackets carry higher premium percentages. The 95.01–90.00% LTV band (a 5%–10% down payment) currently carries a 4.00% premium added to the mortgage principal; the 90.01–85.00% band carries 3.10%, and the 85.01–80.00% band carries 2.80%. A buyer can lower their LTV by either increasing the down payment or accepting a lower purchase price. At renewal, lenders typically re-calculate LTV against the current market value rather than the original purchase price, which can put a borrower into a higher or lower LTV band depending on price movement during the term.
Frequently asked questions
- What is a "high-ratio" mortgage versus a "conventional" mortgage?
- A high-ratio mortgage has an LTV above 80% (down payment below 20%) and must carry default mortgage insurance from CMHC, Sagen, or Canada Guaranty. A conventional mortgage has an LTV at or below 80% (down payment at or above 20%) and does not require insurance. The high-ratio / conventional distinction has knock-on effects: high-ratio mortgages can be amortized over 25 years (or 30 years for first-time buyers and newly built homes under the December 2024 reform), while conventional mortgages can be amortized over 30 years by-right at most lenders. Both apply the OSFI Guideline B-20 stress test at federally-regulated lenders.
- Does LTV use the purchase price or the appraised value?
- The lower of the two. If a property purchases at $1,000,000 but appraises at $950,000, the lender computes LTV against $950,000 — a buyer putting $200,000 down would have an LTV of 84.2%, not 80% as the contract price would suggest. This is why a low appraisal can push a deal from conventional into high-ratio territory or from one CMHC premium band to a higher one. The lender controls the appraisal selection and the appraisal-price-to-purchase-price ratio is the dominant risk variable on any sub-20%-down BC deal.
- How does LTV change at renewal?
- At renewal (typically every 5 years for fixed-rate mortgages), the lender recomputes LTV against the current market value of the property. If the property has appreciated, LTV drops — a borrower who started at 80% LTV at purchase may renew at 60% LTV five years later, even without paying down principal. If the property has depreciated, LTV rises — a borrower may renew at 85%–90% LTV and find themselves in a high-ratio band or unable to switch lenders without re-insurance. Effective November 21, 2024, federally-regulated lenders may renew an existing uninsured mortgage with the same lender without re-applying the stress test, which softens the renewal-LTV risk for borrowers staying with the incumbent.
Related terms
- CMHC Default Insurance Cap — The maximum home purchase price eligible for CMHC default mortgage insurance — raised from $1,000,000 to $1,500,000 effective December 15, 2024.
- 30-Year Amortization Eligibility — A December 15, 2024 reform permitting 30-year amortization on CMHC-insured mortgages for first-time home buyers (any property) and any buyer purchasing newly constructed housing.
- OSFI Mortgage Stress Test (B-20) — OSFI Guideline B-20 requires federally-regulated lenders to qualify mortgage borrowers at the greater of (a) the contract rate plus 2 percentage points or (b) the Bank of Canada qualifying rate (5.
See also
Use any of these formats. Codex content is licensed under CC BY 4.0 — attribution required.
@misc{bronsonjob-mortgage_loan_to_value_ratio,
author = {Job, Bronson},
title = {{Loan-to-Value (LTV) ratio — Canadian mortgage underwriting}},
howpublished = {BC Real Estate Codex},
year = {2026},
url = {https://www.bronsonjob.com/codex#mortgage.loan_to_value_ratio},
urldate = {2026-05-22},
note = {Fact ID: mortgage.loan_to_value_ratio, version 1.}
}Job, B. (2026). Loan-to-Value (LTV) ratio — Canadian mortgage underwriting. *BC Real Estate Codex*. Retrieved 2026-05-22, from https://www.bronsonjob.com/codex#mortgage.loan_to_value_ratio
Loan-to-Value (LTV) ratio — Canadian mortgage underwriting — Bronson Job PREC, BC Real Estate Codex (2026-05-22). https://www.bronsonjob.com/codex#mortgage.loan_to_value_ratio
Fact id: mortgage.loan_to_value_ratio · v1 · machine-readable: /api/v1/facts/by-id/mortgage.loan_to_value_ratio.json
Verified sources (2)· re-verified 2026-05-22Click to expand
Every claim on this page is sourced to a primary government, regulator, or industry-association URL. We re-verify quarterly; the verification dates below show when each source was last confirmed against the live government page.
- Government of Canadaretrieved 2026-05-22Bank Act, RSC 1991, c. 46https://laws-lois.justice.gc.ca/eng/acts/B-1.01/
- CMHCretrieved 2026-05-22CMHC Mortgage Loan Insurance Cost — Premium Schedulehttps://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/homeownership-programs/cmhc-mortgage-loan-insurance-cost
mortgage.loan_to_value_ratio · v1View in Codex →License: This definition is licensed under CC BY 4.0. Cite as: "Loan-to-Value (LTV) Ratio", BC Real Estate Glossary by Bronson Job, https://www.bronsonjob.com/glossary/loan-to-value-ratio.
