CMHC MORTGAGE LOAN INSURANCE
With mortgage loan insurance from Canada Mortgage and Housing Corporation (CMHC), you can own your home with a minimum down payment of 5 per cent—with interest rates comparable to rates typically reserved for homebuyers with down payments of 20 per cent or more. Most financial institutions require such insurance when the homebuyer has less than 20 per cent of the purchase price as a down payment.
Mortgage loan insurance requires homebuyers to provide the down payment from their own resources, such as their savings and RRSPs. Gift down payments from immediate relatives are also acceptable. For down payments of less than 10 per cent, CMHC also enables lenders to offer homebuyers the flexibility to use additional (non-traditional) sources for a down payment such as borrowed funds or lender incentives.
COST OF MORTGAGE INSURANCE
To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. The premium is calculated as a percentage of the loan and is based on the size of your down payment. A list of premiums can be obtained at http://cmhc.ca by searching the keyword “premiums”. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.
For the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the interest rates savings achieved.
CMHC offers mortgage loan insurance premium refunds for homeowners who purchase an energy efficient home or if they purchase and make energy-saving renovations to an existing home.
NEW TO CANADA
Newcomers to Canada with permanent resident status are eligible under all CMHC Homeowner Mortgage Loan Insurance products—regardless of how long they have been in Canada. Nonpermanent residents can also purchase a home with a minimum down payment of 10 per cent.
Self-employed borrowers who have documentation to support their income are eligible under all existing CMHC mortgage loan insurance products with the same eligibility criteria and insurance premiums as salaried borrowers. You may also be eligible for CMHC mortgage loan insurance even if you have difficulty providing third-party income validation.