Increase in CMHC Mortgage Loan Insurance Premiums — Key Facts

Mortgage loan insurance helps protect lenders against mortgage default and enables consumers to purchase homes with a minimum down payment of 5% with interest rates comparable to those with a 20% down payment. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price.

Effective June 1, 2015, the mortgage loan insurance premiums for homebuyers with less than a 10% down-payment will increase by approximately 15%. The increase applies to mortgage loan insurance premiums for residential housing of 1 and 2 units for homebuyers with less than a 10% down payment.

For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on housing markets.

Effective June 1st, 2015, CMHC Purchase (owner-occupied 1 – 4 unit properties) mortgage loan insurance premiums will be:

Loan-to-Value Ratio Standard Premium
(Current)
Standard Premium
(Effective June 1st, 2015
Up to and including 65% 0.60% 0.60%
Up to and including 75% 0.75% 0.75%
Up to and including 80% 1.25% 1.25%
Up to and including 85% 1.80% 1.80%
Up to and including 90% 2.40% 2.40%
Up to and including 95% 3.15% 3.60%
90.01% to 95% — Non-Traditional Down Payment 3.35% 3.85%

* CMHC mortgage loan insurance premium is calculated as a percentage of the loan based on the loan-to-value ratio. The premium can be paid in a single lump sum but more frequently is added to the mortgage principal and amortized over the life of the mortgage as part of regular mortgage payments.

The current mortgage loan insurance premiums will apply for applications submitted to CMHC prior to June 1, 2015, regardless of the closing date. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.

Examples:

In 2014, the average CMHC insured loan at 95% loan-to-value was $252,530. Based on this figure, the higher premium will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer. This is not expected to have a material impact on housing markets.

95% Loan-to-Value
Loan Amount $150,000 $250,000 $350,000 $450,000
Current Premium $4,725 $7,875 $11,025 $14,175
New Premium $5,400 $9,000 $12,600 $16,200
Additional Premium $675 $1,125 $1,575 $2,025
Increase to Monthly $3.12 $5.20 $7.29 $9.36

Based on a 5 year term @ 2.79% and a 25 year amortization
*Premiums in Manitoba, Ontario and Quebec are subject to provincial sales tax — the sales tax cannot be added to the loan amount.

Frequently Asked Questions:

I recently signed a purchase and sale agreement on a home, the closing date is before June 1, 2015, and my mortgage will be CMHC-insured. Will the premium increase affect me?

CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted to CMHC on or after June 1, 2015, regardless of the closing date of the home purchase.

In order to be eligible for the current (lower) mortgage loan insurance premium your lender will need to submit a request for mortgage loan insurance to CMHC prior to June 1, 2015. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.

I am planning to buy a home in the coming months and will require a CMHC-insured mortgage. Will the premium increase affect me?

If the request for mortgage loan insurance is submitted to CMHC on or after June 1, 2015, the new (higher) mortgage loan insurance premium will apply.

In order to be eligible for the current (lower) mortgage loan insurance premium your lender will need to submit a complete request for mortgage loan insurance to CMHC prior to June 1, 2015. In addition to the application identifying you as the borrower, the application must also include the address of the property you will be purchasing.

I am planning to buy a home in the coming months and will require a CMHC-insured mortgage. If I do not know which property I will be purchasing before June 1, 2015, am I eligible for the current (lower) mortgage loan insurance premium?

Your lender will need to submit a complete mortgage loan insurance application to CMHC prior to June 1, 2015. Once your lender has obtained the necessary borrower and property information from you, they will be able to proceed with a CMHC mortgage loan insurance request.

If the request for mortgage loan insurance is submitted to CMHC on or after June 1, 2015, the new (higher) mortgage loan insurance premium will apply.

I am purchasing a home that is being built and will require a CMHC-insured mortgage. I will require progress advance draws which will occur on or after June 1, 2015. Will the premium increase affect me?

As long as the complete request for mortgage loan insurance is received by CMHC prior to June 1, 2015, the application will be subject to the current (lower) mortgage loan insurance premium even if progress draws are requested on or after June 1, 2015.


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