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CANADA MORTGAGE AND HOUSING CORPORATION
 

Important Notice

As of February 15, 2016, the minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price (or lending value) of $500,000 or less, the minimum down payment is 5%. When the purchase price (or lending value) is above $500,000, the minimum down payment, as a percentage of lending value, is 5% for the first $500,000 and 10% for the remaining portion.

Example:

For a home with a purchase price (or lending value) of $600,000, the minimum down payment required is:

= 5% of $500,000 + 10% of $100,000
= $25,000 + $10,000
= $35,000

CMHC Purchase

15 minutes | 0.25 CE | Highlight Sheet (PDF)*
*Viewing of all materials is required to claim your CE credit.

CMHC Purchase

Introduction Slide

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Slide 1

(Visual) Header Text: Canada Mortgage and Housing Corporation, Mortgage Loan Insurance

(Visual) Title: CMHC Purchase

(Visual) Footer: Everything you need to open new doors, Canada Mortgage and Housing Corporation Logo with Home to Canadians tagline and Canada Wordmark

CMHC offers a variety of innovative mortgage loan insurance products to help you meet your clients’ home financing needs.

This presentation provides you with information on CMHC Purchase and includes an overview of the product features and eligibility requirements.

Slide 2

(Visual) Header Text: CMHC Purchase

(Visual) Footer: www.Everythingyouneed.ca and Canada Mortgage and Housing Corporation Logo with Home to Canadians tagline is used throughout the presentation

For most people, the hardest part of buying a home, especially a first home, is saving the necessary down payment.

CMHC-insured financing can help open the doors to homeownership with a minimum down payment of 5 percent.

Slide 3

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(Visual) Subtitle Text: What is CMHC Purchase?

With CMHC Purchase, you can offer your clients flexible and affordable financing choices to help make the dream of homeownership a reality.

Slide 4

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(Visual) Subtitle Text: Features

With CMHC Purchase, loan-to-value ratios up to 95% are available for 1 to 2 unit residential properties.

For 3 to 4 unit residential properties, loan-to-value ratios up to 90 percent are offered when the borrower has traditional sources of down payment.

Down payment flexibility is a feature of CMHC Purchase. In addition to traditional sources, non-traditional sources of down payment are permitted. We will look closer at traditional sources and non-traditional sources of down payment and the product features applicable to borrowers with non-traditional sources of down payment later in the presentation.

Flexible financing options are also available to meet your clients’ financing needs including single and progress advances, and amortization periods of up to 25 years.

CMHC’s portability feature allows borrowers to port their mortgage loan insurance from an existing home to their new home. Portability allows repeat users of CMHC Residential Loan Insurance to save money by reducing or eliminating the premium on the purchase of a subsequent home.

Slide 5

(Visual) Header Text: CMHC Purchase

For CMHC Purchase, traditional sources of down payment include:

  • The applicant’s savings;
  • An RRSP withdrawal;
  • Funds borrowed against proven assets;
  • Sweat equity, where sweat equity represents less than 50 percent of the minimum required equity;
  • Unencumbered land owned by the applicant;
  • Proceeds from the sale of another property;
  • A non-repayable gift from an immediate relative of the borrower;
  • A non-repayable equity grant from a federal, provincial or municipal agency; and/or
  • Rent-to-own payments in excess of market rents.

Slide 6

(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: Borrower Eligibility

CMHC Purchase is available to permanent residents, including newcomers to Canada and self-employed borrowers.

Non-permanent residents with traditional sources of down payment, are eligible for insured financing for a one-unit owner-occupied property and a maximum loan-to-value ratio of up to 90 percent.

CMHC homeowner mortgage loan insurance is available to a maximum of one property per borrower or co-borrower at any given time.

Slide 7

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(Visual) Subtitle Text: General Property Requirements

This product is available for one-to-four unit owner-occupied properties, located anywhere in Canada, from coast to coast to coast.

The property must be suitable for, and available for, full time year-round occupancy by the owners or a relative of the owner on a rent-free basis at some point during the year.

Lenders must confirm owner occupancy and maintain the confirmation on file. The lender may obtain a verbal or written confirmation from the borrower and retain the confirmation in any format that the lender deems prudent.

Properties that are constructed for seasonal use, or have seasonal access, are not eligible.

The maximum purchase price or as-improved property value for loans must be below $1,000,000.

Slide 8

(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: History of Managing Credit

Borrowers must have an established credit history.  The general guidelines for the history of managing credit are as follows:

  • Where the loan-to-value ratio is greater than 80 percent, the recommended minimum credit score is 600.
  • Where the loan-to-value ratio is between 60.01 percent and 80 percent, the recommended minimum credit score is 580; and
  • Where the loan-to-value ratio is less than or equal to 60 percent, no minimum credit score is required.

Slide 9

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(Visual) Subtitle Text: Debt Service Guidelines (Credit Score:  GDS/TDS)

CMHC normally restricts debt service ratios to 35% (GDS) and 42% (TDS). For borrowers with credit scores over 680, GDS and TDS ratios above 35% and 42% may be considered, but the absolute maximum will be 39% for GDS ratio and 44% for TDS ratio.

Satisfying the minimum 680 credit score alone does not automatically entitle the borrower to debt service flexibilities. The availability of these flexibilities is based on an assessment of the strength of the overall application.

Slide 10

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(Visual) Subtitle Text: Loan Security, Interest Rate Type

Loan security may be in the form of a first mortgage.

A chattel mortgage may also be used to secure the loan.

CMHC-insured financing is available for loans with a fixed interest rate, capped and standard variable interest rates and adjustable interest rates.

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(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: Non-Traditional Sources of Downpayment

As we discussed earlier in the presentation, CMHC Purchase offers flexibility in terms of traditional and non-traditional sources of down payment. We will now take a closer look at the product highlights applicable when the borrower has non-traditional sources of down payment.

For loan-to-value ratios of 90.01 percent to 95 percent, CMHC enables lenders to offer homebuyers the ability to use non-traditional sources of down payment for 1 to 2 unit properties, providing more ways to make homeownership a reality.

This product is available to permanent residents, including newcomers to Canada. Non-permanent residents with non-traditional sources of down payment are not eligible.

Loan security can be in the form of a first mortgage only; and the recommended minimum credit score is 650.

Slide 12

(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: Non-Traditional Sources of Downpayment

For CMHC Purchase, non-traditional sources of down payment include any source that is arm’s length to and not tied to the purchase or sale of the property such as:

  • Borrowed funds;
  • Gifts; and/or
  • 100% sweat equity.

Slide 13

(Visual) Header Text: CMHC Purchase Premiums

This table provides you with information on the applicable premium rates for CMHC mortgage loan insurance.

The premium payable is based on the percentage of the property’s lending value that is being financed by a mortgage.

For loan-to-value ratios between 90.01 percent and 95 percent, the premium on the total loan amount is dependent upon the borrower’s source of down payment.

The premium is due and payable to CMHC as the insured loan is advanced. If the lender is passing the cost of the CMHC mortgage loan insurance premium along to the borrower, the premium can be paid in a single lump sum or it can be added to the mortgage and amortized over the life of the loan.

(Visual): A table shows CMHC mortgage loan insurance premiums for owner-occupied properties based on applicable loan-to-value ratios, as follows:

  • For loan-to-value ratios of up to and including 65%, the premium on the total loan amount is 0.60%
  • For loan-to-value ratios of up to and including 75%, the premium on the total loan amount is 0.75%
  • For loan-to-value ratios of up to and including 80%, the premium on the total loan amount is 1.25%
  • For loan-to-value ratios of up to and including 85%, the premium on the total loan amount is 1.80%
  • For loan-to-value ratios of up to and including 90%, the premium on the total loan amount is 2.40%
  • For loan-to-value ratios of up to and including 95% for traditional down payment, the premium on the total loan amount is 3.60%
  • For loan-to-value ratios of up to and including 95% for non-traditional down payment, the premium on the total loan amount is 3.85%)

Slide 14

(Visual) Header Text: CMHC Green Home

(Visual) Subtitle Text: Energy-Efficiency is top of mind for your clients

Energy-efficiency is top of mind for your clients.

CMHC can help to make energy-efficient housing choices more affordable for your clients by offering mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or make energy-saving renovations to an existing home. To learn more, visit www.everythingyouneed.ca or ask your CMHC Business Development Representative about CMHC Green Home.

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(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: Benefits for Mortgage Professionals

Let’s recap some of the benefits of CMHC Purchase as it relates to you, the mortgage professional.

Generations of Canadians have been able to purchase their first home with the assistance of a CMHC-insured loan.

There are several considerations to take into account when your client is looking to buy a home. With flexible down payment sources and financing options, CMHC Purchase can help you meet the financing needs of your clients and open the doors to homeownership.

Your ability to offer flexible and affordable financing choices to help your clients achieve the dream of owning their own home encourages customer retention, helping you to build long-term client relationships, and grow your business.

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(Visual) Header Text: CMHC Purchase

(Visual) Subtitle Text: Need Help?

If you have questions about CMHC Purchase or any other CMHC mortgage loan insurance product, it’s reassuring to know that CMHC is just a phone call away.

Call our 1-888 GO emili line. Our bilingual Client Service Agents and Residential Underwriters have the skills and the expertise to ensure your questions will be answered quickly and efficiently.

Slide 17

For more than 65 years, CMHC has shared a wealth of knowledge, housing expertise, tools and guidance to help Mortgage Professionals stay informed and become trusted advisors to their clients.

Slide 18

CMHC. Everything you need to open new doors

Slide 19

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(Visual) Disclaimer: CMHC is making the information contained in this presentation available for general information purposes only. It is intended to provide highlights of CMHC products to assist Approved Lenders in understanding CMHC’s current requirements. Lenders using the information should be aware that other conditions, requirements and restrictions may apply and that the information is subject to change without notice. The information is provided without warranty and it is not intended that Lenders or other readers will rely on this information without verifying the full terms of CMHC underwriting policies.

Slide 20

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