CMHC offers mortgage loan insurance to protect banks and lenders against mortgage default and enables homebuyers to purchase a home with as little as a 5% down payment. Mortgage insurance is typically required by all lenders when homebuyers make a down payment of less than 20%Â of the purchase price.
The mortgage loan insurance premium charged by CMHC is calculated as a percentage of the loan based on the loan-to-value ratio. The premium is typically added to the mortgage principal and amortized over the life of the mortgage as part of regular mortgage payments. CMHC reviews its premiums on an annual basis and has adjusted them several times with increases and decreases.
The new premium rates will be in effect for all new applications submitted on or after May 1, 2014. Fees will increase for all levels of loan to value by approximately 15%.
