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As the Government of Canada's national
housing agency, Canada Mortgage and Housing Corporation (CMHC),
plays a major role in Canada's housing industry. The agency
offers numerous housing services including research services,
market evaluations, and access to affordable financing choices.
Programs include aboriginal housing, residential rehabilitation
assistance, home adaptation for seniors independence, public
and private partnerships, and numerous grants and awards.
For many people, especially first time
home buyers, saving the necessary down payment is a challenge.
Additionally, with less than 25% of the purchase price to
put down, a lender requires mortgage insurance for protection
against any payment defaults. CMHC makes it easier for Canadians
to obtain a home, by providing mortgage loan insurance. By
providing this insurance, CMHC limits the lenders' risk, allowing
the lender to finance up to 95% of the purchase price of a
new home. You can purchase a property with as little as 5%
down. If the cost is $150,000, you only need a down payment
of $7,500.
You can become a homeowner, even if you
don't have a large down payment put aside. You just need to
meet the following conditions and home ownership can be within
your reach.
The home must be located
in Canada and considered your principal residence
You must have a down payment of at least 5% of the purchase
price
Your home-related expenses must not exceed 32% of gross
household income
Your total monthly debt load must not exceed 40% of gross
monthly household income
You must be able to pay closing costs equal to at least
1.5% of the purchase price
An affordable form of insurance
The premium you will pay for your CMHC
mortgage insurance is calculated as a percentage of the loan
and is based on your down payment as a percentage of your
home's purchase price. Fees range from 0.5% to 3.75%; a .50%
surcharge is added to the premium if multiple advances are
required. You can pay this premium in a single lump sum, or
it can be included in your monthly payments, along with the
application fee.
| Loan Size % of purchase price |
Single Advance |
Multiple Advance |
| Up to 65% |
0.50% |
1.00% |
| Up to 75% |
0.75% |
1.25% |
| Up to 80% |
1.25% |
1.75% |
| Up to 85% |
2.00% |
2.50% |
| Up to 90% |
2.50% |
3.00% |
| Up to 95% |
3.75% |
4.25% |
Note: A multiple advance may be necessary
in a new home purchase or mortgage plus home improvement type
loans. E.g. $100,000 for house, $10,000 for improvements.
- An affordable form of insurance
- Calculating Gross Debt Service (GDS)
- Calculating Total Debt Service (TDS)
- Your monthly mortgage payments
Work through the following
worksheet to see what you can afford.
Don't forget about
closing costs
Current mortgage
rates
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