Downpayment Rules

Due to recent legislative changes in Canada, the minimum downpayment required to purchase a residential home is five percent of the purchase price. If your down payment is less than twenty percent of the purchase price you are required to purchase mortgage insurance from CMHC or a private insurer. The insurance premium is a fixed percentage of your mortgage principal, and will vary between .65% and 2.75% depending upon the size of your downpayment.

The required mortgage insurance is available from two sources in Canada. Canada Mortgage and Housing Corp. (CMHC), a government agency whose role is, in part, to assist purchasers to qualify and purchase homes, and from Genworth Financial, a private sector insurance company. The premium can be added to the loan principal.

If you do not have a large down payment, talk to your financial institution about the availability of mortgage insurance or visit the CMHC web site or the Genworth Financial web site for more details.