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CMHC, the insurer, charges a one-time insurance premium for the total amount borrowed. The premium is as follows: 

             - 1.75% from 80.01% to 85%, 

  - 2.00% from 85.01% to 90%, 

  - 2.75% from 90.01% to 95% traditional loan, 

- 2.90% from 90.01% to 95% Flex Down loan,

- 3.10% from 95.01% to 100% Flex 100 loan.

The Flex Down product was introduced in March 2004, and is available for mortgage loans between 90.01% and 95% inclusive, and only applies where the borrower is using non-traditional sources of equity for the down payment. If you have the minimum 5% from your own resources (or a gift from a close family member), you should apply for CMHC's traditional 95% product, which has a lower premium than the Flex Down product.

Borrowers normally need a minimum 5% down payment from their own resources to purchase a home. However, using CMHC's Flex Down product, lenders can provide borrowers with the option of owning a home sooner, provided the funds are at arm's length (not related in any way) to the property purchase or sale transaction and not tied to the purchase or sale of the property. With Flex Down, the minimum 5% down payment can come from a variety of sources, such as borrowed funds or lender cashback incentives. However,  you may not be able to negotiate a lower interest rate with the cashback incentive; if it's not from a cashback, you should get a better interest rate than the posted rate from the lender.

The Flex Down option is intended to appeal to individuals who may lack a cash down payment, but have a good credit history and sufficient income to support the financial obligations of home ownership. Your lender or mortgage broker should provide you with complete information on CMHC's Flex Down mortgage loan insurance product. All other underwriting criteria and product features (such as portability) are the same as CMHC's traditional 95% product.

From November 17, 2006, CMHC provides a mortgage insurance option for qualified borrowers who do not have a 5% down payment. CMHC Flex 100 is available for qualified purchasers requiring a mortgage loan between 95.01% and 100%. The premium is 3.10% for this option. 

From December 15, 2006, CMHC has extended the amortization period up to 40 years. There is a surcharge of 0.20% if the amortization period is beyond 25 years, up to and including 30 years; for a period greater than 30 (to 35 years) it's 0.40%; and for a period greater than 35 (to 40 years), it's 0.60%. For example, if you choose a 30-year amortization period, and you borrow 90% of the total house price/value (you put 10% down), your CMHC premium will be 2.00% plus 0.20% = 2.20%. Note: The longer the amortization period, the more it will cost you in interest.  

CMHC has eliminated application fees on all homeowner high-ratio mortgage loan insurance products.The typical fee eliminated is $165, but could be as high as $235, depending on the type of insurance transaction. 

To promote energy efficiency, CMHC offers a 10% premium refund when you use CMHC insured financing to purchase an energy-efficient home or to make energy-saving renovations; and you can choose a longer amortization period than 25 years, but note that the longer the repayment period, the more it will cost you in  the long run. The premium refund applies to purchasers of new or resale energy-efficient homes, or those who renovate their homes to make them more energy efficient. For complete details, visit www.CMHC.ca.

From January 14, 2005, homeowner mortgage loan insurance is available for a second year-round home without additional premiums, surcharges or borrower qualifications. This enhancement recognizes the evolving lifestyle needs of Canadians who require the purchase of a second home as a result of career or family decisions. Qualified borrowers are able to use any of CMHC's existing homeowner products, including Flex Down, Flex 100, Line of Credit (LOC), when they purchase or refinance a second home.  

In circumstances where a property cannot be appraised accurately, or it may be difficult to resell, such as an isolated farm property, the lender may not be willing to lend more than, say, 65%, and the loan may require insurance coverage. The premium rate for a 65% loan would be 0.50%, between 65.01% and 75% (including 75%), it would be 0.65%. 

The premium rate (%) is always based on the loan-to-value (LTV) ratio, and the LTV ratio is expressed as a percent of the loan to the lending value. The lending value is the lesser of the purchase price or appraised market value of a property. For example, assuming a 25-year amortization, the LTV ratio of a loan for $90,000 on a home which costs $100,000 is 90%, and the premium for a 90% loan is 2%. Therefore, 2% of $90,000 or $1,800 is your CMHC insurance cost, which can be paid at closing to avoid paying interest on the premium, or added to the principal (total amount borrowed) and form part of your regular mortgage payments.

If you receive funds from a close relative to assist with the down payment, CMHC may require that you have a letter from the donor confirming that the funds are a genuine gift, and the gift money must be in your possession before the mortgage insurance application is sent to CMHC. Note: For all CMHC loans, regardless of the percent amount of your down payment, some lenders require that gifted funds be in your possession at least 30 days before you make an Offer to Purchase on a particular home, so the earlier the gifted funds are in your name and the letter in your possession, the better.

Closing costs

CMHC may require that you have at least l.5% of the purchase price to cover your closing costs; however, try to put aside more, if possible. For the Flex Down product, these funds can be borrowed, as long as any associated payment is included in the TDS calculation based on a 12-month repayment period.

Purchase Plus Improvements Option (applicable to loans from 65% to 100%)

CMHC-insured mortgage loans are available to cover the purchase price of a home and any immediate major renovations or other improvements that you may wish to make to the property. An itemized list and cost estimates are required at the time of mortgage application.

Because each PPI situation is unique, the borrower should work closely with the lender to discuss how an insured PPI mortgage loan can work in their specific situation. Although the renovation funds will only be provided by the lender after the closing date, when the repairs or improvements are done, the insurance premium is added to the total mortgage loan, including improvement costs, on the closing date.

CMHC's Portability Feature (applies to loans from 65% to 100%)

CMHC's Portability Feature saves money for the repeat user of CMHC homeowner mortgage loan insurance by reducing or eliminating the premium payable on the new insured loan. All homeowner loans, for a property consisting of one to four units, provided at least one unit is owner-occupied, are eligible for portability. As long as it is not in arrears, the original insured loan may be ported to any location in Canada, using the lender's portability plan.  

CMHC's Portability Feature could save you thousands over the lifetime of the loan

Ask your lender to provide you with comparative calculations so that you can see for yourself if portability is the best option for you financially over the term of the loan, taking into account the cost of the discharge penalty payable at closing versus porting the mortgage, the Portability Feature, existing and current interest rates, and other cost factors.  

General information

Don't confuse CMHC loan insurance with mortgage life insurance, which is not mandatory. If you are interested in purchasing mortgage life insurance, compare the lender-supplied insurance premium which is added to your regular mortgage payments versus your insurance broker's charge for coverage.  

There is no discharge penalty for an open mortgage; it can be paid off in part or in full at any time, without interest penalty. A closed mortgage is only fully open at the end of its term, and cannot be prepaid before the end of the term unless your contract states otherwise, or your lender approves. Generally, when a property is sold, the institutional lender allows a closed mortgage to be paid off, with a discharge penalty which is quite costly, or you may port the mortgage balance without penalty if you purchase another home at the same time. Make sure the Portability Feature is included in your mortgage contract when buying a home. 

Contrary to CMHC, Genworth Financial Canada (GE Canada's new name) is a private insurer (and two more private firms are entering this market), and there are some differences between them. If you would like to know more about it, please ask your lender or mortgage broker.

This site was designed as a consumer service to help Buyers and Sellers make informed real estate decisions. Ever year we see consumers struggle with the same questions and problems over and over again.  We know that it is often difficult to get relevant information when you are looking to buy and sell a home.

In order to better educate and inform buyers and sellers, we have provided comprehensive information as a FREE No-Obligation Service. Many buyers and sellers who visit this site are so impressed with this service that they will contact us (or one of our sponsors) in order to assist them in the purchase or sale of their home.

We truly hope that you find these reports, information, tools and resources helpful and we look forward to helping you with your move.

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Direct Line: (604)377-1240

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