CMHC Insurance

To support the creation of affordable housing,CMHC enables lenders to offer financing flexibilitiesto home buyers and developers of multi-unit properties. Our flexibilities can help homebuyers by acceptinga broader range of down payment sources and higher ratios. We can also help developers with reduced equity requirements,lower premiums, flexibility in cash flow requirementsand loan advancing. Without CMHC's assistance, it would have been very difficultto proceed with this project as an affordable development. Mortgage loan insurance flexibilities. One more way CMHC helps Canadiansmeet their housing needs.
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When you're purchasing a home in Canada with less than twenty per cent down, you'll haveto pay mortgage default insurance.  You might have heard of your friends refer to it asCMHC insurance.  But how much extra will it cost you?  We've brought in Mortgage Broker Frank Uithovento walk you through the calculations.   For this example, let's say you purchased a home worth four hundred and seventy-fourthousand dollars, and you saved up forty thousand dollars towards the price of your new home.   The first thing you want to do is calculatewhat your new mortgage amount will be.  To do that, it's your purchase price minus thedown payment.  So, using our example, we're going to take the home price less the downpayment.  That's going to leave us with a new mortgage amount of four hundred and thirty-fourthousand dollars.   Next, we want to calculate the down payment as a percentage of the purchase price.  Todo that, we're going to divide the down payment of forty thousand dollars into the home priceof four hundred and seventy-four thousand dollars.  For our example, that's forty thousanddollars divided by four hundred and seventy-four thousand dollars, which gives us eight-point-four-fourpercent.   Next, we're ready to calculate your mortgage insurance premium.  This is your mortgage amountmultiplied by your premium percentage.  But where do we get your premium percentage from?  This chart will help you determine what yourpremium percentage will be, based on your down payment amount.  So, this means that withan eight-point-four-four percent down payment, you're looking at a two-point-seven-five percentpremium.   Multiply your mortgage amount by

your mortgage premium of two-point-seven-five percent.  That'sgoing to leave you with eleven thousand nine hundred thirty-five dollars, which is howmuch your mortgage insurance is going to cost you.   Our last step is calculating your new totalmortgage amount.  To do this, you're going to addyour insurance premium to your mortgageamount.  Using our example, we end up with an amount of four hundred and forty-six thousandnine hundred thirty-five dollars.   If you want to decrease your insurance premium, you will need to increase your down payment. Additionally, for homes valued over one-million dollars, you are required to put a minimumof twenty percent down, as you do not qualify for mortgage default insurance.