FAQ About CMHC

Whether you have found the perfect home (or are just getting started with your search), it is important that you understand exactly how you are going to finance it!

Many people turn to CMHC mortgages and loan insurance. Here are some frequently asked questions (FAQs) about CMHC so that you can be sure that you are ready to finance your new home.

What is a mortgage?

A mortgage is a loan for the purchase of your home. Because it is such a large loan, you will have to go to a mortgage lending company to purchase a home.

When you sign the agreement, you are promising to repay the loan in full. The property is considered security in case you default on the loan. Once you pay it in full, the lender will release the property to you.

If you default on the loan, the lender may take your property to satisfy the remaining debt that you owe on it.

How do I qualify for a mortgage?

Each lender knows that there is risk involved when it comes to lending out enough money to buy a home. Because of that, they look at many factors to ensure that you are going to be able to pay it back.

There are going to be looking at your income and your debt load. They want to make sure that you won’t spend more than thirty-two percent of your gross income on a home. They also look at your debt load. It should be less than forty-percent of your gross income, even with your mortgage.

What is a down payment?

A down payment is the amount of money that you need to get a mortgage loan. Though most lenders require twenty-percent of the loan as a down payment, there are ways to buy a home even if you only have five percent saved.

Where does the money come from for my down payment?

There are multiple ways to save money for your down payment. Most people use their savings, though you may also accept gifts from family members. Some people withdraw money from their RRSP, while others use the money from the sale of their other home. Some people also use funds borrowed against proven assets.

What are some of the other upfront costs of buying a home?

Besides your down payment, you are also going to have to pay for other things. You are going to be in charge of any home inspection and appraisal fees. Then, you will have closing costs, which include insurance costs, land registration fees, legal fees, notary fees, and much more. All of this adds up, so it is important to talk to your lender to know exactly how much money you need to have upfront.

What is CMHC mortgage loan insurance?

If you buy a home with less than twenty percent down, you are going to need mortgage loan insurance. This helps to protect your lender if you can’t pay your mortgage.

Why would you want CMHC mortgage loan insurance?

Most people don’t have a large down payment when they finally buy a home. CMHC mortgage loan insurance lets you finance up to ninety-five percent of the home, so you can buy a nice home without spending a lot of money upfront.

What is the minimum down payment that I will need for CMHC mortgage loan insurance?

The down payment that you will need depends on the cost of the home.

If it is five hundred thousand dollars (or less), you are going to need at least five percent down.

If it is more than that (but less than one million dollars), you will need five percent on the first five hundred thousand dollars. You will need ten percent on the rest.

Is there a maximum purchase price for CMHC mortgage loan insurance?

There is. You can’t get mortgage loan insurance for homes that are over one million dollars.

Who has to pay my CMHC mortgage loan insurance?

You are going to be in charge of paying for your own insurance.

How much does CMHC mortgage loan insurance cost each month?

The amount of mortgage loan insurance that you pay will depend on the cost of your home. It is a percentage of your mortgage. To make it more complicated, it also depends on how much money you were able to put down.

There are different ways to pay for it. You can pay it all at once in a lump sum, or you can add it to your monthly mortgage payment. If you add it in with your monthly payment, you will just have to pay a little more each month. It won’t be a separate bill.

How much money do I need to put down to avoid CMHC fees?

The only way that you can avoid the CMHC fees is by having a sizeable down payment. You are going to need to have at least twenty percent down if you don’t want CMHC insurance.

Who arranges for CMHC mortgage loan insurance if I need it?

You don’t have to worry about your mortgage loan insurance. Your lender is going to take care of it. He or she will help you negotiate the terms of your loan, along with the insurance if you need it.

Will I only have CMHC mortgage loan insurance if I buy a traditional single-family property?

CMHC offers mortgage loan insurance for multiple properties, including condominiums, mobile homes, and much more. You may even get mortgage loan insurance for any rental properties that you may buy.

In order to get the best deal for your mortgage, it is important that you know as much as you can about the process. It also helps to have a good team on your side.