CMHC Insurance Rates (CMHC Fees) for Mortgages
The question of down payment and associated CMHC (Canadian Mortgage and Housing Corporation) rates aka CMHC Fees is poorly understood in the arena of Real estate.
There are multiple factors affecting real estate and its affordability. Your capability of making mortgage payments doesn’t necessarily mean the house is affordable.
The amount of down payment has direct impact on affordability but there are other expenses to be considered. Average home buyer is keen to know how much maximum mortgage they can get approved for and at what mortgage rate.
This approach hinders vast population to acquire their own homes and unfortunately are left with option of renting alone.Surprisingly, the higher down payment does not necessarily translate into quicker home ownership.
Higher down payment makes the lender (Bank) comfortable and approves a mortgage for your home. Statistical speaking, owner occupied mortgages pose the least amount of risk of defaults and is considered to be the safest from a lenders perspective.
Historically Canadian home owners take great pride in their home ownership and 99% of them make their payments consistently.
The credit goes to both, the lenders and home owners. Banks now lend up to 80% of the price of your house instead of 75%. This change of Bank act has made home ownership a possibility for many more Canadians.
You can acquire your home with as low as 5% up to 20% down payment. Banks charge additional insurance premium on top of interest rates to protect lenders.
You can pay this amount upfront or can add to your monthly installments. If the borrower does not pay the monthly mortgage installment, the insurer pays the lender.
Scroll down to check out CMHC Insurance rates (%) premiums charged on top of the interest rate and the amount added on to the mortgage amount.
Is There a Difference Between CMHC Insurance Rate Premium and CMHC Fees?
When talking about a bigger picture there is no difference between CMHC Insurance rates or CMHC Fees however rates are shown in percentages (%) and CMHC fees reflects the dollar amount ($) which a borrowerr pays to get their loan insured for the lender.
CMHC RATE PREMIUM (Effective March 17, 2017)
| Financing Required | Premium % of Loan Amount |
| Up to and including 65% | 0.60% |
| Up to and including 75% | 1.70% |
| Up to and including 80% | 2.40% |
| Up to and including 85% | 2.80% |
| Up to and including 95% | 4% |
| 90.01% - 95% Flex Down | 4.50% |
| Date of Purchase | Rates for 5% - 9.99% Down Payment |
Rates for 10 % - 14.99% Down Payment |
| March 17, 2015 | 3.15% | 2.40% |
| As of June 01, 2015 | 3.60% | 2.40% |
| As of March 17, 2017 | 4.00% | 3.10% |
*Premiums in Ontario and Quebec are subject to provincial sales tax — the sales tax cannot be added into the mortgage.
Beside CMHC there are 2 other private companies namely Genworth Financial and Canada Guarantee who does mortgage insurances as well. Majority are done by CMHC as this is a queasy government association
As of Jan 01, 2018 irrespective of your down payment you have to pass the mortgage stress test. If you are first time home buyer looking for a mortgage or refinancing a mortgage you are encouraged to speak to our mortgage broker. We are conveniently located in Mississauga.
Go ahead and get your free monthly mortgage payment calculator with CMHC Fees included in the calculations.
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This mortgage default insurance premium rates depend upon borrowers purchase price and down payment.
All default insurance rate premiums including all applicable taxes are due upfront upon the completion of the transections.
Default insurnace premium rates ahs no impact on amortization periods.
The general rule applies as follows;
- All insured mortgages (less than 20% ) can only have upto 25 years amortization period only.
- All conventional mortgages (i.e. 20% or more down payment) primary residence purchases can have maximum amortization period of 30 years.
Yes You Do pay 13% taxes on your mortgage default insurance premiums.
You got 2 choices to pay the applicable CMHC Insurance premium rates;
- UPFRONT OPTION: You are allowed to pay all the insurnace premium plus all applicable taxes upfront cash, due upon completion of the purchase.
- GET ADDED TO YOUR MORTGAGE OPTION: Many prefer to go with this option where home buyers are allowed to add the CMHC insurance premiums along with all the applicable taxes to the loan amount of the mortgage. Under this option, the borrower monthly mortgage payments will include the interest they pay on theit default insurnace premiums as well. This option allows you not to cough up cash upfront from your pocket but you will keep paying interest along with with your mortgage payment untill you pay off the full loan amount of outstanding mortgage by selling the property.
GLAD YOU ARE CURIOUS ABOUT THIS QUESTION !
Following are the only 2 ways to pay off the default insurance premiums when buying a primary residence;
- Make the lumpsum payment upfront when due upon closing
- Pay off all the mortgage in full via selling the property
GREAT QUESTION INDEED!
One word answer to this question is NO.
Here’s WHY…
During refinancing, all the outstanding mortgage loan amount is to be paid off. Since the mortgage default insurance premiums were added to the amount of the mortgage initially , your final pay off statement also includes the default insurance premiums.
References: www.cmhc-schl.gc.ca/