Canadian mortgages vary based on their loan-to-value or, put, the percentage of the down payment. The home is an asset, securing the mortgage loan. The more that is owed relative to its value will dictate what type of mortgage is needed.
In the eyes of the bank, it's all about risk. Among other variables, such as Credit Scores and Income, the main factor is the property loan-to-value. In fact, with a large down payment, a homebuyer with a low credit score will have the opportunity to purchase. However, not every buyer will have a large down payment at their disposal.
This is where the National Housing Act allows for a purchase with a lower down payment, as low as 5% of the purchase price. To achieve this, the mortgage must be insured to alleviate the risk from the bank, with the insurance premium passed onto the homeowner.