CHMC Insurance

What is Mortgage Loan Insurance?

When you need a mortgage loan that is more than 80% of the purchase price of your home, you must buy mortgage loan insurance. It protects the lender and Canadian federally regulated lending institutions will require it. CMHC stands for Canada Mortgage & Housing Corporation.

Having mortgage loan insurance means that if you, the borrower, default on your mortgage, the Lender is paid back by the insurer - CMHC or a private company. With the risk of losing their money removed, Lenders have the confidence to make mortgage loans to homebuyers of up to 95% of the purchase price of 1 -2 unit residential properties. With 3-4 unit dwellings a 10% down payment is required. However, borrowers with less than a 20% down payment must meet standards for a five-year fixed rate mortgage even when choosing lower interest or short-term mortgages. CMHC does not offer mortgage insurance on second homes. Borrowers cannot act as coborrowers on other applications.

The Process

Your financial institution will fill out the required forms and will submit them to CMHC for you usually via "emili" which is an electronic system used between Lenders and CMHC.

What does Mortgage Loan Insurance cost?

The Mortgage Loan Insurance premium is calculated as a percentage of the loan (0.60% to 3.35%) and is based on the size of your down payment. The higher the percentage of the total house price that you borrow, the higher percentage you will pay in insurance premiums.

For the purposes of qualifying for CMHC Mortgage Loan Insurance, the maximum purchase price
or as-improved property value must be below $1,000,000, when the loan-to-value ratio is greater
than 80%.

Check with your lender for qualifying criteria and availability.

CMHC Premium Rates and Calculations

C.M.H.C.'s insurance fees are based on a sliding scale dependent upon your loan to value ratio. The higher the loan to value ratio, the higher the insurance premium will be. Below are the standard rates based on an amortization period of no greater than 25 years. These rates
are not applicable to self-employed individuals that have no 3rd party income validation.

Below are the various rates charged:

At the moment there are three insurance companies. The three are:

1. CMHC or Canada Mortgage & Housing Corporation (www.cmhc-schl.gc.ca);

2. Genworth Financial Canada (www.cmhc-schl.gc.ca); (www.genworth.ca);

3. Canada Guaranty Mortgage Insurance Company (www.canadaguaranty.ca).

The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments or paid off in a lump sum at the time of purchase.

Down Payment Requirements

Non-traditional sources of down payment include:

Any source that is arm’s length to and not tied to the purchase or sale of the property, such as borrowed funds, gifts, 100% sweat equity, lender cash back incentives. Check with your lender for qualifying criteria and availability.

Traditional sources of down payment include:

Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (<50% of min. required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equity grant (non-repayable grant from federal, provincial or municipal agency). Notice that a larger premium is charged when using the non-traditional down payment choice(3.35% of the borrowed amount instead of the normal 3.15%).

Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a  burden to your estate.