How Much Does CMHC Mortgage Loan Insurance Cost?

peter rawski - Mortgages 101: Buying Your First Home

What’s in it for You?

  • You could purchase a home with a minimum down payment of 5%.
  • CMHC’s Mortgage Loan Insurance can be applied to many different types of housing.
  • CMHC’s Mortgage Loan Insurance is available everywhere in Canada.
  • CMHC has several flexible products and options to help you and your lender to tailor your finances to your unique situation.

A wide range of CMHC products are available through your lender. For example, if your house needs renovations, refinancing or if you are moving to another home, please check with your lender or mortgage broker on qualifying criteria for these flexible mortgage insurance options. Ask your lender about getting pre-approved for CMHC Mortgage Loan Insurance — this way you can find out beforehand how much of a loan you can qualify for..

CMHC’s Mortgage Loan Insurance can help your lender meet your needs in many different ways. To learn more, read the Frequently Asked Questions about CMHC Mortgage Loan Insurance.

 

How Much Can You Afford?

Not sure? If insured through CMHC, you can work out the mortgage loan that you can afford, with just a few simple calculations. If you don’t know how much your monthly mortgage payment might be, you can use our mortgage calculator to determine the likely monthly payments (principal + interest) associated with different house prices at different interest rates.

The following calculations will help you determine how much you can afford. Your mortgage lender or mortgage broker will make these and other calculations when evaluating your unique situation. Ask them about being pre-approved for a CMHC-insured mortgage to avoid any surprises. You can also do the following exercises to find out where you stand.

Calculating Gross Debt Service (GDS)

This is a way of estimating the maximum home-related expenses you can afford to pay each month. To qualify for CMHC insurance, the total should not exceed 32% of your gross monthly household income.

Calculating Total Debt Service (TDS)

This enables you to estimate the maximum debt load you can carry each month. It should not exceed 40% of your gross monthly household income.

 

How Much Does CMHC Mortgage Loan Insurance Cost?

To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. Your lender will give you the exact price when you apply for a mortgage.

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.

Remember: without mortgage insurance you may avoid the insurance premium but you’ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved.

A 10% premium refund, and a premium refund for a longer amortization period (if applicable) may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Homes.

For portability and refinance, the premium is the lesser of Premium on Increase to Loan Amount or the Premium on Total Loan Amount. In the case of portability, a premium credit may be available under certain conditions.

 

 

Loan-to-Value Premium on Total Loan Premium on Increase to Loan Amount for Portability and Refinance
Standard Premium Self-Employed without 3rd Party Income Validation Standard Premium Self-Employed without 3rd Party Income Validation**
Up to and including 65% 0.50% 0.80% 0.50% 1.50%
Up to and including 75% 0.65% 1.00% 2.25% 2.60%
Up to and including 80% 1.00% 1.64% 2.75% 3.85%
Up to and including 85% 1.75% 2.90% 3.50%* 5.50%*
Up to and including 90% 2.00% 4.75% 4.25%* 7.00%*
Up to and including 95% 2.75% N/A 4.25%* *
90.01% to 95% — Non-Traditional Down Payment*** 2.90% N/A * N/A
Extended Amortization Surcharges Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period (for LTV ≤ 80%).

* Premiums shown with an “*” do not apply for refinance. For portability the maximum LTV ratio is 90%, but CMHC may consider higher LTV ratios when the new ratio is equal to or less than the original LTV. For portability, the premium is higher for non-traditional down payments on Increase to Loan Amount.

** For conversion from Self-Employed with traditional 3rd party income validation to Self Employed without traditional 3rd party income validation, the premium is the lesser of: a) the Premium on Total Loan Amount or; b) the outstanding balance multiplied by a 1.5% premium plus the Premium on Increase to Loan Amount.

*** Down Payment Requirements — 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). 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.

Premiums in Manitoba (effective July 15, 2012), Ontario and Quebec are subject to provincial sales tax. The provincial sales tax cannot be added to the loan amount.

 

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