Less Than 25% Down

 

When you require a residential mortgage loan greater than 80% of the property value - under the legislated Canadian National Housing Act (NHA) - you must obtain a "high-ratio" form of default insurance".

Registered mortgage-loan insurance offers the lender a guarantee that (high-ratio) borrowers will not default on their mortgage payments. By federal law, all Canadian NHA Lending Institutions require this insurance protection for high-ratio mortgage financing.

Canada Mortgage and Housing Corporation (CMHC) furnishes the necessary insurance to NHA Lenders for Canadian citizen home ownership. Through an act of parliament (1946), CMHC has the authority to represent the Government of Canada in all matters prescribed under the National Housing Act.

CMHC mortgage-loan insurance coverage is available for a variety of "owner-occupied" residential housing, including strata condominiums, town-homes, row-housing, single family or semi-detached property, (also legal duplexes and triplexes or fourplexes with at least one residential owner-occupied component).

When any residential first mortgage request exceeds 80% of subject property value, loan insurance is automatically factored into that mortgage application. The high-ratio mortgage insurance premium (based on the loan-to-value ratio) ranges from 1.00% to 3.40% of the new mortgage amount. This one-time premium is generally added to the approved new mortgage balance.

With high-ratio loan insurance protecting Canadian NHA Lending Institutions from borrower default, CMHC Mortgage Insurance makes it possible for you to purchase your family home with as little as a 5% down payment, or to refinance your present home up to 90% of its current market value.

Since March 2004, high-ratio mortgage applicants are permitted to borrow part or all of their down payment providing the repayment for that debt is factored into an applicant's Total Debt Service Ratio. (see more information on Debt Servicing Ratios)

Important to note: Because CMHC underwrites the risk factors for Canadian residential mortgages exceeding 80% loan-to-value, CMHC also determines the NHA "Qualifying Guidelines" for borrower eligibility.

< CMHC "Lender's Guide To Borrower Eligibility >

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