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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

Homeownership Within Reach


Homeownership Within Reach

Introduction Slide

(Visual) Canada Mortgage and Housing Corporation Logo

(Visual) Text: The CLASSROOM for Mortgage Professionals. Free training and webinars to expand your expertise

Slide 1

(Visual) Header Text: Canada Mortgage and Housing Corporation, Bringing Homeownership Within Reach

(Visual) Title: CMHC Mortgage Loan Insurance

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

CMHC is Canada’s national housing agency and is committed to enhance the quality, affordability and choice of housing in Canada. One of the ways that we do this is through our commercially operated Mortgage Insurance business. Through our Mortgage Insurance business, CMHC has made a meaningful difference in the everyday lives of Canadians and has helped close to 10 million Canadians access their housing of choice.

As an agency of the federal government, CMHC is committed to providing mortgage loan insurance in every part of the country from coast-to-coast-to-coast including small, rural and northern communities and on-reserve.

Slide 2

(Visual) Header Text: Bringing Homeownership Within Reach

(Visual) Subtitle Text: In this presentation:

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

In this Presentation, we will cover:

  • What is Mortgage Loan Insurance?
  • What are the advantages of mortgage loan insurance for homebuyers?
  • How are mortgage loan insurance premiums calculated and how are they paid, and
  • Innovative and affordable financing flexibilities to meet your individual needs – today and in the future

Slide 3

(Visual) Header Text: Bringing Homeownership Within Reach

(Visual) Subtitle Text: What is Mortgage Loan Insurance?

Let’s begin by understanding what mortgage loan insurance is and when it is required.

Generally, mortgage loan insurance is required by lenders when homebuyers make a down payment of less than 20% of the purchase price of a home. In Canada, mortgage loan insurance is offered to lenders by CMHC and other private insurers.

Note that mortgage insurance is available only for properties with a purchase price, lending value or as-improved / renovated value below $1,000,000.

Mortgage loan insurance protects lenders against financial losses due to payment default by the homeowner.

Slide 4

(Visual) Header Text: Bringing Homeownership Within Reach

(Visual) Subtitle Text: Mortgage Loan Insurance is not:

Throughout the home buying process you will be hearing a number of mortgage related terms such as references to various types of insurance coverage.

It is important not to mistake Mortgage Loan Insurance as another type of insurance such as disability, employment or job loss insurance, life insurance or property/fire insurance.

Ask your mortgage professional for additional information.

Slide 5

(Visual) Header Text: Advantages for Homebuyers

(Visual) Subtitle Text: What are the advantages of Mortgage Loan Insurance?

What are the advantages of mortgage loan insurance for homebuyers?

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

With mortgage loan insurance from CMHC, you can own your own home with a minimum down payment of 5%.

Another advantage of mortgage loan insurance for homebuyers is lower interest rates for the life of your mortgage.

Mortgage loan insurance from CMHC helps you to access the most competitive interest rates in the market – comparable to those typically reserved for homebuyers with a down payment of 20% or more.

Slide 6

(Visual) Header Text: Advantages for Homebuyers

(Visual) Subtitle Text: Down Payment Example:

In this example, let’s assume that the purchase price of the home is $250,000.

Under a conventional mortgage, a maximum loan of up to 80% of the purchase price or $200,000 could be financed. This would require the home buyer to provide a down payment in the amount of $50,000.

Under a high-ratio or CMHC-insured mortgage, a maximum loan of up to 95% of the purchase price could be financed.

In the example, a CMHC-insured mortgage loan of 90% of the purchase price or $225,000 would result in a down payment requirement of $25,000. That’s $25,000 less than the down payment requirement for a conventional mortgage.

Most mortgage loan insurance products require home buyers to provide the down payment from their own resources, such as savings and RRSP’s. Gift down payments from immediate relatives are also acceptable. For down payments of less than 10%, CMHC also enables lenders to offer home buyers the flexibility to use additional sources of down payment. For more information on down payment requirements, consult your mortgage professional.

Slide 7

(Visual) Header Text: Mortgage Loan Insurance Premiums

(Visual) Subtitle Text: CMHC premiums for purchase transactions

To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you.

The premium payable is based on the percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or as illustrated in the last example, it can be added to your mortgage and included in your monthly payments.

(Visual) A table shows CMHC mortgage loan insurance premiums for purchase transactions based on applicable loan size (percentage of purchase price that requires financing) as follows: 

  • For a loan size of 80.01%to 85%, the premium on the total loan amount is 1.80%
  • For a loan size of 85.01% to 90%, the premium on the total loan amount is 2.40%
  • For a loan size of 90.01% to 95% for traditional down payment, the premium on the total loan amount is 3.60%
  • For a loan size of 90.01% to 95% for non-traditional down payment, the premium on the total loan amount is 3.85%

The table also notes that additional product specific premium and surcharges may apply and that loan-to-value restrictions apply for certain CMHC products.

Slide 8

(Visual) Header Text: Mortgage Loan Insurance Premiums

(Visual) Subtitle Text: Example:

Let’s look closer at the calculation for a mortgage loan insurance premium.

If a mortgage loan of $200,000 represents 95% of a home’s purchase price, the mortgage loan insurance premium payable is 3.60% or $7,200.

Again, the premium can be paid in a single lump sum or added to your mortgage and included in your monthly payments.

(Visual) Example of Mortgage Loan Insurance Premium is provided.

The mortgage amount is $200,000.

The loan size (% of purchase price that requires financing) is 95%.

The insurance premium payable is calculated by multiplying 3.60% by $200,000, which is $7,200.

Slide 9

(Visual) Header Text: Bringing Homeownership Within Reach

(Visual) Subtitle Text: Meeting Your Individual Needs Today and In the Future

CMHC assists Canadians in all parts of the country to access a wide range of innovative and affordable financing choices to meet your individual needs – today and in the future.

Slide 10

(Visual) Header Text: Meeting Your Individual Needs

(Visual) Subtitle Text: Purchasing a home and making improvements?

Are you purchasing an existing home and making immediate improvements?  Make it your own.

Work with your mortgage professional to obtain CMHC-insured mortgage financing of up to 95% of the home’s as-improved value.

The maximum as-improved value must be below $1,000,000.

Slide 11

(Visual) Header Text: Meeting Your Individual Needs

(Visual) Subtitle Text: Purchasing an energy-efficient home?

Looking to buy an energy-efficient home?  CMHC can help make energy-efficient housing choices more affordable, by offering mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or make energy-saving renovations to an existing home.

For more information, visit CMHC’s web site at www.cmhc.ca.

Slide 12

(Visual) Header Text: Meeting Your Individual Needs

(Visual) Subtitle Text: Are you new to Canada?

Are you new to Canada?  CMHC has developed a new micro site – ‘Housing for Newcomers’ – to offer new Canadians a one-stop online source for housing-related information. 

We invite you to visit www.cmhc.ca/newcomers.

Information is available in eight languages to serve you better.

CMHC-insured financing is available to borrowers with permanent and non-permanent residence status, helping newcomers to realize their dream of homeownership in Canada.

Slide 13

(Visual) Header Text: Meeting Your Individual Needs

(Visual) Subtitle Text: Need to access equity in your home?

There are a variety of reasons why a homeowner may wish to access the equity in their home. CMHC Mortgage Loan Insurance offers flexible and affordable refinancing options of up to 80% of a home`s lending value.

Note that mortgage insurance is available only for properties with a purchase price, lending value or as-improved / renovated value below $1,000,000.

Products available from individual lenders may vary and are subject to the lender’s eligibility rules. Ask your mortgage professional for qualifying criteria and availability.

Slide 14

(Visual) Header Text: Everything you need to open new doors

As Canada’s national housing agency and leading source of objective and reliable housing information, CMHC can also help to open the world of housing information – all under one roof.

Our publications cover every facet of owning, maintaining or renovating a home.

For information on CMHC products, services and publications, visit www.cmhc.ca or call CMHC at 1-800-668-2642 to get the answers from someone you can trust.

Slide 15

Millions of Canadians continue to benefit from mortgage insurance and much more from CMHC – a place they already call home.

(Visual) Canada Mortgage and Housing Corporation Logo with Home to Canadians tagline

(Visual) Disclaimer: This presentation is not intended to provide financial or other advice and should not be relied upon in that regard. The information (including the assumptions and examples) it contains are provided for general illustrative and estimative purposes only, and does not take into account the specific objectives, circumstances and individual needs of the reader. All information is provided on an "as is" basis without warranty or representation of any kind, express or implied and it is not intended that the reader will rely on this information without verifying the full terms of CMHC underwriting policies. The reader should be aware that other conditions, requirements and restrictions may apply and that the information is subject to change without notice. CMHC assumes no responsibility or liability of any kind in connection with the information provided. CMHC and the names of any CMHC products and services, as well as any logos or drawings are trademarks, registered trademarks or official marks of CMHC. © 2012, Canada Mortgage and Housing Corporation. All rights reserved.

Slide 16

(Visual) Canada Wordmark