Your Home With Just 5% Down
Ratio Mortgage - CMHC & GE Capital Insurance
is High Ratio Financing?
loan insurance is typically required by lenders when homebuyers make a downpayment
of less than 20% of the purchase price. Mortgage loan insurance helps protects
lenders against mortgage default, and enables consumers to purchase homes with
little or no downpayment with interest rates comparable to those with a
20% downpayment. High
ratio mortgages must be insured through either CMHC (Canada Mortgage & Housing
Corporation) or GE Capital Insurance. This insurance is paid for by the borrower
and is for the lender, protecting them from the risk of the mortgage not being
premium is calculated as a percentage of the mortgage amount, depending on the
loan-to-value ratio, and may be added to the principal amount of the mortgage.
The premiums are as follows:
in Ontario and Quebec are subject to provincial sales tax the sales tax
cannot be added to the loan amount.
must insure the entire loan, not just the amount that is above 75% of the purchase
price. Most lenders will let you roll the insurance premium into your mortgage.
If you do, though, you'll end up paying a good deal of interest on the insurance
fee as well.
Do You Qualify?
home you plan to purchase must be your principal residence, and located in Canada.
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
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 through CMHCs Flex Down product.
Check with your lender for qualifying criteria and availability.
Flex 100 helps borrowers who have not saved a down payment but have a proven track
record of managing their debt and the financial capacity to repay the mortgage,
to purchase a home.
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, shouldnt represent more than 32% of your gross household
income (Gross Debt Service (GDS) ratio). Use the GDS form to calculate how much
you can afford in housing costs to be eligible.
total debt load shouldnt 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. Add up your costs and determine
your Total Debt Service ratio using the TDS form.
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. That is why, when qualifying for CMHCs Mortgage Loan Insurance,
our Home Purchase Cost Estimate worksheet form will help you calculate your total
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.
requirements may apply and are subject to change. For details, please contact
your lender or mortgage broker.
qualified the minimum initial loan term is 3 years. For more information visit
Website or call: (604) 731-5733.
Tricks & Tips for Successful Home Buying
Us Help Find the Right House for You...an
easy to fill out form highlighting your "Dream Home".
Steps to Buying Your Home...find
out the most important steps in planning the purchase of your first home.
Pre-approved for a Mortgage...find out how you can increase your bargaining
Money on Your Mortgage...helpful suggestions to reduce the amount of interest
Costs...don't forget about closing costs when you are purchasing your
Transfer Tax Exemption...you might be eligible for an exemption of up