CMHC: Canadian Mortgage and Housing Corporation
When buying a home majority of banks and financial institutions only require 5% down as the down payment. The down payment minimum over the years has decreased to help stimulate the Canadian housing market and get people into homes that have good credit but not necessarily a huge down payment.
What is CMHC?
CMHC has been in place for over 65 years and has helped millions of Canadians meet their housing needs. CMHC provides mortgage loan insurance that enables people to buy a home with as little as 5% down. The amount of the premium you have to pay CMHC depends on the loan amount and how much your down payment is. If you have a down payment that is 20% or greater the banks do not require you to take out CMHC insurance on the loan.
How Does CMHC Get Paid?
The CMHC premium fee is incorporated into your Mortgage. It is not a fee that has to be paid out of pocket before closing.
It is usually recommended when purchasing a home with less than 20% down that you make the offer Conditional on Financing. Yes, you have been pre-approved for a mortgage amount but CMHC still has to approve you and not only do they have to approve you BUT they have to approve the home that you are purchasing! Many people do not realize that it is not only the individual being looked at by CMHC but the home is also under scrutiny. An appraisal is usually done on the property before financing is confirmed by CMHC. In some rare cases, the individual and home are both approved by the bank/financial institution for financing but CMHC does not approve the loan and will not supply the insurance required to establish the financing. It is always important to make sure that before waiving your financing conditions that you have full approval from both the Lender and CMHC.
If you would like more information or have any more questions about CMHC please give one of our Realtors a call at HomeLife Emerald Realty Ltd. Brokerage at 705-424-0770.
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