CMHC Insurance

CMHC Insurance

Mortgage default insurance (CMHC)

This insurance is created to make the financial institutions more comfortable when lending you a mortgage for the property you want to purchase. It does not protect you directly but it protects your lender in case you don’t make your mortgage payments.

If you have a down payment of less than 20% of the home’s value, you must purchase mortgage default insurance.

Mortgage insurance is calculated as a percentage of the value of the mortgage amount.

If your down payment is between 5% to 9.99%, the mortgage insurance will represent 3.6% of the mortgage amount.

For down payments of 10% to 14.99%, the mortgage insurance will cost 2.40%.

And for down payments of 15% to 19.99%, mortgage insurance costs 1.80%.

Homes with a purchase price of more than $1 million are not eligible of CMHC That means anyone buying a house of this amount or more they have to pay at least 20% downpayment.

In Canada, you must put down a minimum of 5% as a down payment on your home. However, this only applies to homes with a purchase price of less than $500,000. It’s important to note that if you’re buying a home costing between $500,000 and $1 million, the federal government recently increased how much you must place as a down payment. With the new rules, you have to put down 5% for the first $500,000 but 10% on the amount between $500,000 and $1 million.