CMHC Insurance
Canada Mortgage and Housing Corp. (CMHC) is the Government of Canada's national housing agency, they play a major role in Canada's housing industry. CMHC develops new ways to finance home purchases. They encourage innovation in housing design and technology. Their mortgage loan insurance helps Canadians realize their dream of owning a home. CMHC allows prospective home buyers to obtain mortgage financing with as little as 5% down. By providing Mortgage Loan Insurance to lenders, CMHC limits the lender's risk enabling the lender to finance up to 95% of the purchase price of a home. (http://www.cmhc-schl.gc.ca).Note: 1) Normally, the minimum down payment comes from your own resources. However, a gift of a down payment from an immediate relative is acceptable for dwellings of 1 to 4 units. For eligible borrowers, additional sources of down payment, such as lender incentives and borrowed funds, are also permitted through CMHC’s Flex Down product. Check with your lender for qualifying criteria and availability.
Note: 2) CMHC also provides mortgage loan insurance for rental housing, see the CMHC website for more details or contact your lender. For our purposes I have only outlined information for the purchase of homes to be used as the principal residence of the borrower.)
To be eligible for CMHC Mortgage Loan Insurance you must meet the following criteria:
- The home must be located in Canada and be considered your principal residence.
- You must have a down payment of at least 5% of the purchase price of the property. (7.5% for 2 unit properties) Note: Exceptions
- Your lender must be a CMHC approved lender.
- Your total monthly housing costs, including Principal, interest, property taxes, heating, and 50% of applicable condominium fees, shouldn’t represent more than 32% of your gross household income (Gross Debt Service (GDS) ratio).
- Your total monthly payments must not exceed 40% of your gross monthly income. (refer to the Mortgage Qualifier Webpage on this site for how to calculate)
- You must be able to pay closing costs equivalent to at least 1.5% of the purchase price. ( Refer to the Expense Breakdown webpage on this site for how to calculate)
|
Single Advance | ||
| Up to 65% | .5% | ||
| Up to 75% | .65% | ||
| Up to 80% | 1.00% | ||
| Up to 85% | 1.75% | ||
| Up to 90% | 2.0% | ||
|
Up to and including 95% |
2.75%
2.90% |
The premium for your Mortgage Loan Insurance is calculated as a percentage of the loan. You can pay this premium as a single lump sum or add it to your mortgage and include it in your monthly payments.