With as little as a 5% down payment, from personal or other sources (see below for eligible other sources), all home buyers have access to mortgage insurance enabling them to enter the housing market, as long as they can manage the costs of homeownership.
Details
Mortgage insurance for 95% mortgages is available to both first-time and repeat home buyers. Homebuyers have the option of using personal sources, such as savings or gifts, or other sources, such as lender incentives, borrowed funds/credit, or sweat equity (the amount of money spent to help construct the home) for the required 5% down payment. Buyers using the program may consume up to 32% of their gross monthly household income for payments on loans for 95% of the lending value of the house where the 5% down payment comes from other sources, will be 2.9% of the mortgage loan. This premium can be added to the mortgage. The maximum amortization period is 25 years. Insurance premiums on loans for 95% of the lending value of the house where the 5% down payment comes from personal sources will be 2.75% of the mortgage loan. Insurance premiums on loans for 95% of the lending value of the house where the 5% down payment comes from other sources will be 2.9% of the mortgage loan. This premium can be added to the mortgage. Borrowers are required to demonstrate, at the time of application, their ability to cover closing costs equal to at least 1.5% of the purchase price. Where the minimum equity requirement is being met by way of a financial gift, the funds must be in possession of the borrower 15 days before making an offer to purchase.
For more information call CMHC at 1-800-668-2642 or access through www.cmhc.ca