How Changes to CMHC Mortgage Insurance Premiums Will Affect You

| May 17, 2014

CMHC mortgage insurance PremiumsRecent changes in CMHC mortgage insurance premiums mean higher costs for those who are buying a home with less than 20% for a down payment. As of May 1st, these fees increased by about 15% and more changes are to come by month end.

Luckily, most homeowners will not feel a huge impact from this fee increase as CMHC mortgage insurance premiums are tacked onto your mortgage amount. Payments are made throughout the entire amortization period. Prospective homeowners will only pay an additional $2for every $100,000 they insure. There will also be a slight increase in the amount of PST paid on the mortgage insurance when the sale closes.

CMHC has also advised that by month end, the second home and self-employed without 3rd party income validation mortgage insurance programs will no longer be offered. Currently, CMHC allows self-employed applicants to apply using alternative documentation. By the end of May, those working for themselves will need to provide income confirmation. Which will consist of two recent years of income tax documentation, just as all others need to do. However, if you are self-employed, there is no need to be discouraged if you cannot provide this. Different insurers have different requirements. A mortgage professional can still help you find a product that is suitable for you. There are many avenues available other than CMHC and mainstream lenders.

The new rules also restrict the number of homes that qualify for mortgage insurance per borrower. CMHC will limit the availability of homeowner mortgage loan insurance to a maximum of one residential property per borrower/co-borrower at any given time. The new rule means that if your present home is insured through CMHC, you cannot use CMHC for a second purchase. If you are planning to buy a cottage and do not have 20% down, you can no longer use CMHC. The same restrictions apply if you are planning on cosigning a loan for someone else. If this will affect an upcoming purchase, it’s best to finalize things now. Your offer must be accepted and your application must be submitted to CMHC before the end of this month. There may be a backlog of applications, so do not leave your application to the last minute.

The two other major insurers, Genworth and Canada Guaranty have not moved in this new direction yet. So even if you do not have 20% down, there are still other options. A qualified mortgage professional will keep you up to date on these and any anticipated changes. Specific questions regarding options should be directed to a mortgage broker. Not all lenders have access to a wide range of insurers. A good mortgage broker can still find a mortgage that is right for you as mortgages are their business.


If you are a self employed individual or have questions about the new CMHC mortgage insurance premiums and how it may affect you. Contact us today to speak to one of your mortgage professionals.

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