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Buying with 5% Down


Don't have the usual 20% down payment? No worries — Increase your leverage with a high ratio mortgage! This consumer - oriented program makes the dream of home ownership a reality for more Canadians than ever before.

What is Mortgage Loan Insurance?

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* — with interest rates comparable to those with a 20% down payment.      

Who is eligible?

Any qualified borrower who meets the lenders criteria for income and credit may be eligible for these programs. You do not need to be a first time buyer to qualify.

What is the minimum down payment required?

Effective February of 2016, the minimum down payment for new insured mortgages was increased from 5% to 10% for the PORTION of the house price above $500,000. The 5% minimum down payment for properties up to $500,000 remains unchanged. Please take a look at the following chart showing the new minimum down payments by house purchase price.

**Please note that for homes over $1,000,000, a down payment must be at least 20% of the purchase price. These properties are not eligible for Mortgage Loan Insurance (aka high-ratio insurance) because the down payment must be at least 20%.


**Please note that for homes over $1,000,000, a down payment must be at least 20% of the purchase price. These properties are not eligible for Mortgage Loan Insurance (aka high-ratio insurance) because the down payment must be at least 20%.

How it works

To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

** Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.

What else should you know?

In general, the credit status of an applicant must meet the lending criteria of the particular mortgage lender. A Gibbard Group Financial Consultant can help you meet the required criteria and assist you with the entire mortgage process. Plus we deal with many lenders and therefore have a greater chance of matching you with a lender.

Also, while CMHC will qualify an ex-bankrupt applicant for insurance two years after discharge with subsequent re-established credit, many lenders' own rules over -ride this feature, and they will decline the application.

On the other hand there are a number of lenders who specialize in granting and administering mortgages to the full extent of the National Housing Act at competitive interest rates.

For more information please feel free to visit:
CMHC – Genworth Financial -

Or, as always....Contact us at Gibbard Group Financial.

CMHC High Ratio Fees Effective March 17, 2017 the rate premiums are increasing

**For portability and refinance, the premium is the lesser of Premium on Increase to Loan Amount or the Premium on Total Loan Amount. In the case of portability, a premium credit may be available under certain conditions.

**For purchase/new construction loan applications, the premium rate is applied to the Total Loan Amount. For portability and refinance loan applications, the premium is the lesser of the premium rate applied to the Increase to Loan Amount; or the premium rate applied to the Total Loan Amount.

For portability the maximum LTV ratio is 90%, but CMHC may consider higher LTV ratios when the new ratio is equal to or less than the original LTV. For portability, the premium is higher for non-traditional down payments on Increase to Loan Amount.

** For conversion from Self-Employed with traditional 3rd party income validation to Self Employed without traditional 3rd party income validation, the premium is the lesser of: a) the Premium on Total Loan Amount or; b) the outstanding balance multiplied by a 1.5% premium plus the Premium on Increase to Loan Amount.

***Premiums in Manitoba, Ontario and Quebec are subject to provincial sales tax. The provincial sales tax cannot be added to the loan amount.

 ** Down Payment Requirements — Traditional sources of down payment include: Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (<50% of min. required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equity grant (non-repayable grant from federal, provincial or municipal agency). Non-traditional sources of down payment include: Any source that is arm’s length to and not tied to the purchase or sale of the property, such as borrowed funds, gifts and 100% sweat equity

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