Description

Mortgage loan insurance is generally required by lenders when homebuyers make a down payment of less than 20 per cent of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5 per cent. The Government of Canada offers government-backed mortgage insurance with restrictions through its crown agency, Canada Mortgage and Housing Corporation (CMHC).

Details

• Requires a minimum down payment of at least 5 per cent for a mortgage to qualify for government-backed insurance.
• Requires a minimum down payment of at least 5 per cent for a mortgage to qualify for government-backed insurance.
• Maximum home price that could qualify for government-backed mortgage insurance is now capped at $1.5-million.
• Mortgage insurance is available to both first-time and repeat homebuyers.
• For a purchase price of $500,000 or less, the minimum down payment is 5 per cent. When the purchase price is above $500,000, the minimum down payment is 5 per cent for the first $500,000 and 10 per cent for the remaining portion.
• 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. Check with a lender for qualifying criteria and availability.
• Total monthly housing costs, including principal, interest, property taxes, heating, the annual site lease in the case of leasehold tenure, and 50 per cent of applicable condominium fees, shouldn’t represent more than 32 per cent of gross household income.
• Total debt load shouldn’t be more than 40 per cent of your gross household income.
• Closing costs are in addition to the down payment, equivalent to 1.5 per cent to 4 per cent of the purchase price. Closing costs include but are not limited to one-time items such as lawyer fees, GST/HST, municipal tax (if applicable), and provincial land transfer tax.

Other requirements may apply and may change. For details, please contact a lender or mortgage broker.

CMHC calculates the Mortgage Loan Insurance premium as a percentage of the loan and is based on a number of factors such as the intended purpose of the property (owner occupied or rental), the type of loan (e.g., purchase/ construction or refinance loan), and the size of down payment. See chart for premium details.

FINANCING REQUIRED	PREMIUM % OF LOAN
Up to and including 65 per cent	0.60
Up to and including 75 per cent	1.70
Up to and including 80 per cent	2.40
Up to and including 85 per cent	2.80
Up to and including 90 per cent	3.10
Up to and including 95 per cent	4.00
90.01 per cent to 95 per cent Non-traditional Down Payment	4.50

For more information call CMHC at 1-800-668-2642 or access through www.cmhc.ca