Canada Mortgage and Housing Corporation Insurance (CMHC)

 CMHC Insurance stands for Canada Mortgage and Housing Corporation Insurance. It is a type of mortgage insurance provided by the Canada Mortgage and Housing Corporation (CMHC), a crown corporation of the Government of Canada.   CMHC Insurance plays a vital role in helping Canadians purchase homes, especially first-time homebuyers who may not have a large down payment saved up. By enabling people to buy homes with a smaller down payment, it helps stimulate the housing market while ensuring lenders are protected against the risk of borrower default. 

 What Is CMHC Insurance:

1. Purpose: CMHC insurance protects lenders (such as banks or mortgage companies) in case the borrower defaults on their mortgage. It allows homebuyers to purchase a home with a down payment of less than 20% of the home's purchase price, which is commonly referred to as a high-ratio mortgage.
    
2. Who Needs It?: It is typically required for buyers who have a down payment of less than 20%. This helps them qualify for a mortgage while still ensuring the lender is protected.
    
3. Benefits for Borrowers: 
   • Lower Down Payment: Buyers can purchase a home with as little as 5% down (or sometimes 10% or 15% for higher-priced homes).
      
   • Access to Homeownership: CMHC insurance makes homeownership more accessible to first-time homebuyers or those who may not have the full 20% down payment.
      

1. How Much Does It Cost?: The insurance premium is added to the mortgage and is typically calculated as a percentage of the loan. The exact rate depends on the size of the down payment. The premium can range from 0.6% to 4.0% of the mortgage amount.
    
2. How Is It Paid?: The premium can be paid upfront or added to the mortgage balance, depending on the lender's terms.
    
3. Other Insurers: While CMHC is the most common provider of mortgage insurance in Canada, there are also two other private insurers: Genworth Canada (now known as Sagen) and Canada Guaranty. They offer similar insurance products.

For any further information regarding CMHC Insurance, please Contact Us, and give our licensed agent a call today.