HIGH RATIO MORTGAGES AND CMHC
You Should Know

CANADA MORTGAGE AND HOUSING CORPORATION
CMHC is the housing agency of the Government of Canada. It is a Crown Corporation with a mandate to encourage the construction of new housing, the repair and modernization of existing houses and the improvement of housing and living conditions for Canadians by making home ownership affordable nationally.

CMHC advises the Federal Cabinet on housing matters, designs programs to help Canadians in need get adequate housing and administers federal housing programs.

CMHC also helps maintain a healthy and stable mortgage financing environment so that the housing market can effectively meet rental and ownership market demands. By creating and selling mortgage loan insurance products, CMHC increases the access of individual Canadians to home ownership, helps finance rental housing construction and helps the private sector to finance social housing projects at competitive interest rates.

MORTGAGE LOAN INSURANCE
Under Canadian law, certain lending institutions cannot provide first mortgage financing in excess of 75% of the purchase price or lending value of a house unless the mortgage is insured. Mortgage loan insurance protects Approved Lenders against loss due to borrower default on the loan. NHA Mortgage Loan Insurance is available through NHA Approved Lenders (banks, caisses populaires, credit unions, trust companies, and other financial institutions).

Buying a home is one of the largest financial decisions a person or family will ever make. That is why it is so important to get the right financing at the lowest rate. With a CMHC insured mortgage loan, your down payment can be as low as 5 per cent of the purchase price making home ownership affordable and thereby a reality for many Canadians able to save at least the down payment and closing costs.

When you borrow more than 75 per cent of the purchase price of a home, you can finance in one of two ways:

You can take out an insured mortgage loan for up to 95 percent of the purchase price      or
You can get an uninsured first mortgage loan for up to 75 per cent of the price plus     secondary financing to complete your borrowing.

In some cases, you may be able to assume an existing mortgage at better than current rates (although you may have to look at secondary financing to complete your purchase). If this opportunity arises ask your mortgage advisor to assist you in a cost benefit analysis of assuming the existing financing and possibly arranging a small second mortgage for any shortfall versus assuming an existing mortgage.

BUYING A PROPERTY FOR INVESTMENT PURPOSES WITH A CMHC MORTGAGE
The minimum down payment can be as low as 15% of the property value. It is important to note that there are many other conditions not mentioned above when applying for a CMHC mortgage

CMHC FEES AND PREMIUMS
You pay an application fee to cover the costs incurred by CMHC to review your application. Once your application is approved and closed, you pay an insurance premium based on the size of the loan. This premium can be paid as a lump sum, or you can add it to your mortgage loan so that it is paid out of the advance of funds at closing.

The Application Fee
If appraisal is supplied ......... $75.00
If appraisal is not supplied ..... $235.00

The premiums are based on a single advance and can be added to the amount of your mortgage loan and paid off with your regular mortgage payments. The maximum house price limits for the 5% down payment program (applies where the down payment is less than 10% down) are $250,000 in greater Toronto, Vancouver, Victoria, and Calgary areas - $175,000 in northern areas and in other centres where average house prices tend to be high - and $125,000 everywhere else in Canada.