CMHC and Mortgage Insurance

Financial institutions are required to insure mortgages with a down payment of less than 20%.  This insurance protects the lender from loss if a borrower defaults on their mortgage.  This in turn creates a more stable banking industry, but one that is still able to provide mortgages to buyers with less than 20% down payment. Effective July 9, 2012, all new mortgages requiring approval and insurance with Canada Mortgage Housing Corporation (CMHC), Genworth Financial Mortgage Insurance Company Canada (formerly GE Capital Mortgage Insurance Company), or Canada Guaranty Mortgage Insurance Company will be amortized over a maximum of 25 years. The purchase price or value of the home must be less than $1,000,000.  If you obtained an insured mortgage prior to this date, then your remaining amortization and balance will be grandfathered.

Down payment
Effective February 15, 2016, the minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion.

For example, a home costing $700,000 would require a $45,000 down payment – a 5% down payment on the first $500,000, added to a 10% down payment on the remaining $200,000.

Minimum down payment guide for home between $500,000 – $1,000,000.

CMHC / Genworth / Canada Guaranty Premiums
Premiums are calculated as a percentage of the mortgage and depend on the amount of down payment. The lower the down payment is, the higher the premiums will be. The premiums are usually added to the loan amount.

Down Payment 25 Year Amortization – Premium on Total Loan
15% to 19.99% of purchase price 2.80%
10% to 14.99% of purchase price 3.10%
5% to 9.99% of purchase price 4.00%
 Minimum Down Payment Guide for Home Purchase Price over $500,000
Home Purchase Price
Minimum Down Payment Percentage
Minimum Down Payment Amount
$500,000 and below  5.0% up to $25,000
$600,000  5.8% $35,000
$700,000  6.4% $45,000
$800,000  6.9% $55,000
$900,000  7.2% $65,000
$999,999  7.5% $75,000
$1,000,000 and above  20.0% $200,000 & up

Assuming a mortgage
Mortgage assumption entails taking over the obligations of the previous owner’s or builder’s mortgage when you buy a property.   If you are buying a home with an existing mortgage and the mortgage has a longer amortization, you may be able to assume the mortgage and longer amortization.  This is subject to the lender approval and must be a feature of the current mortgage.  CMHC does not re-qualify on an assumption; this decision will be made solely by the lender based on whether or not you meet the lender’s criteria for qualification.