|
Insuring Your Loan to Reduce Your Downpayment
As a general rule, when you purchase
a home, you must make a minimum downpayment equivalent to 25%
of the purchase price of the property. A conventional mortgage loan cannot
exceed 75% of this price.
However, if you cannot pay this amount, you
can obtain a high-ratio mortgage loan by purchasing mortgage
loan insurance from the Canada
Mortgage and Housing Corporation (CMHC) or
GE Mortgage Insurance Canada. The borrower will take care of making
the request. In this way, you may obtain a mortgage loan of up to 95%
of the purchase price or the market value of the property you wish to
purchase.
The minimum downpayment to purchase a residence
is therefore 5% of the lesser of the following amounts:
 |
the purchase price of the residence;
|
|
the appraisal of the residence.
|
 |
Who pays the insurance premium to CMHC or GE Mortgage
Insurance Canada?
|
The borrower pays the premium, which is generally
added to the loan amount. The premium can reach a maximum of 3.25% of
the capital borrowed.
|
For further information
|
GE Mortgage Insurance
Canada
Private insurer of mortgage loans.
Canada
Mortgage and Housing Corporation (CMHC)
Crown corporation offering mortgage loan insurance products.
|
