Mortgages

Canada Mortgage & Housing Corporation is a huge resource when looking for information about mortgages.  The following information is from their website, however there is much more valuable information, so take a look!

Mortgage Loan Insurance
When it comes to buying your home, nothing is more valuable than peace of mind. That’s why for 60 years Canada Mortgage and Housing Corporation (CMHC) has shared a wealth of knowledge and housing expertise to help create an informed and reassured homeownership experience. Millions of Canadians continue to benefit from mortgage insurance and much more from CMHC — a place they already call home.

Who Needs Mortgage Loan Insurance?
Typically, lenders require mortgage loan insurance for loans made to anyone that wishes to purchase a home with less than 20% of the purchase price. The Canadian Bank Act prohibits most federally regulated lending institutions from providing mortgages without mortgage loan insurance for amounts that exceed 80% of the value of the home or purchases with less than 20% down payment.

Through your lender, CMHC Mortgage Loan Insurance enables you to finance up to 95% of the purchase price of a home.

Use the mortgage calculator on this page to help calculate the maximum house price you can likely afford, the maximum mortgage amount you can likely borrow, and your likely monthly mortgage payments (principal + interest).

What are the General Requirements to Qualify for Homeowner Mortgage Loan Insurance?

• The home is located in Canada.

• You will typically have a down payment of at least 5% of the purchase price of the dwelling, depending on the dwelling type. 
      -  Single-family and two-unit dwellings (5% minimum down payment)
       - Three- or four-unit dwellings (10% minimum down payment)

• Normally, the minimum down payment comes from your own resources. However, a gift of a down payment from an immediate relative is acceptable for dwellings of 1 to 4 units. For eligible borrowers, additional sources of down payment, such as lender incentives and borrowed funds, are also permitted. Check with your lender for qualifying criteria and availability.

• Your total monthly housing costs, including Principal, Interest, property Taxes, Heating (P.I.T.H.), the annual site lease in the case of leasehold tenure and 50% of applicable condominium fees, shouldn’t represent more than 32% of your gross household income (Gross Debt Service (GDS) ratio).

• Your total debt load shouldn’t be more than 40% of your gross household income. The Total Debt Service (TDS) ratio is your P.I.T.H. + the annual site lease in the case of leasehold tenure and 50% of condominium fees (if applicable) + payments on all other debt / gross annual household income.

• You also need to think about closing costs (for example, legal and land transfer fees) equivalent to 1.5% to 4% of the purchase price. Many first-time buyers are surprised by these costs.

• Closing costs include but are not limited to one-time items such as lawyer fees, GST and PST as applicable, land transfer tax if applicable, adjustments, etc., to allow you to complete the house purchase.

• Other requirements may apply and are subject to change. For details, please contact your lender or mortgage broker.