By law, financial institutions require that all mortgages with a loan to value ratio greater than 80% be insured against default. CMHC provides mortgage loan insurance to approved lenders in the event that the home owner defaults on their mortgage. Depending on the situation, a lender may also request that a conventional mortgage be insured through CMHC.

Government Mortgage Rule Changes Effective July 9th, 2012

• For mortgage loans above 80% financing, the maximum amortization is now 25 years.

• If you are purchasing a home that is over $1,000,000, the maximum available financing is 80%.

• Refinancing is available to a maximum of 80%.

• For “Gross Debt Service (GDS)” qualifying, the maximum ratio is now 39% for credit scores of 680+. For credit scores lower than 680, the maximum GDS is 35%. The Gross Debt Service (GDS) ratio is your mortgage payment + property taxes + strata fees + heat, in relation to your gross income.

• For “Total Debt Service (TDS)” qualifying, the maximum ratio is now 44% for credit scores 680+. For credit scores lower than 680, the maximum TDS is 42%. The Total Debt Service (TDS) ratio is the combined total of the GDS payments above + any other monthly obligations you have (such as car loans, student loans, credit cards, lines of credit, etc.), in relation to your gross income.

The following is a summary of the insurance premiums for different loan to value ratios:

* Please note that for extended amortizations, CMHC will add .20 for every 5 years beyond a 25 year amortization. So, for a 35 year amortization, there is a .40 premium surcharge added. This premium surcharge applies no matter which high ratio insurance program you are applying under.

In a refinance transaction, the premium payable is the lesser of a) the new loan amount multiplied by the full premium rate below, or b) the increase in loan amount (top-up amount) multiplied by the top-up premium rate in the table above. The insurance premium may be paid in full on closing or added to the mortgage amount. If added to the mortgage, interest is then paid on the insurance premium over the amortization of the mortgage. Since most buyers do not have the extra cash on closing, it is most common to add the premium to the mortgage.

High Ratio Financing for Self Employed Applicants

* Please note that for extended amortizations, CMHC will add .20 for every 5 years beyond a 25 year amortization. So, for a 35 year amortization, there is a .40 premium surcharge added. This premium surcharge applies no matter which high ratio insurance program you are applying under.