For most people, the hardest part of buying a home is saving the necessary down payment. Todays lenders offer the opportunity of homeownership with as little as 5% down.
To qualify for Mortgage Loan Insurance you need to satisfy the following conditions:
- The home must be located in Canada and considered your principal residence.
- You must have a down payment of at least 5% of the purchase price of the property.
- Your home-related expenses must not exceed 32% of your gross household income.
- Your total monthly debt load must not exceed 40% of your gross monthly income.
- You must be able to pay closing costs equivalent to at least 1.5% of the purchase price.
(This is estimated cash needed for legal fees, building inspections, appraisals, etc.)
Mortgage Loan Insurance to lenders provides protection from the risk of payment default. The fees for this insurance are payable by the Buyer and are generally added to the principal amount of your mortgage and amortized over the life of the mortgage (i.e. 25 years). The fees are as follows:
|AMOUNT FINANCED||CMHC FEE
(based on % of mortgage amount)
|Up to 65%||.50%|
|Up to 75%||.65%|
|Up to 80%||1.00%|
|Up to 85%||1.75%|
|Up to 90%||2.00%|
|Up to 95%||2.75%|
Example: A home purchased at $200,000 would require $10,000 as down payment and $3,000 available for closing costs. The mortgage needed would be $200,000 - $10,000 = $190,000. The fees would be 2.75% of $190,000= $5,225. The total mortgage financed on the home would be $190,000 + $5,225 = 195,225.
EXTENDED AMORTIZATION SURCHARGES
Add 0.20% FOR EVERY 5 YEARS OF AMORTIZATION BEYOND THE 25 YEAR MORTGAGE AMORTIZATION PERIOD.
The above information is subject to change. Please confirm rates with your lender.