Mortgage Blog

New Downpayment Requirements for Mortgage Loan Insurance

March 7, 2016 | Posted by: Laurie Anne Faulkner

As of February 16th, 2016 the minimum down payment requirements to purchase a home in Canada has changed for anyone needing mortgage laon insurance with CMHC, Genworth or Canada Guaranty 

For CMHC-insured mortgage loans, the maximum purchase price or as-improved property value must be below $1,000,000.00

Minimum Downpayment Requirements:

  • The minimum down payment is 5% when the purchase price is above $500,000 or less.
  • The minimum down payment for a property over $500,000 is 5% for the first $500,000 and 10% for the remaining portion of the purchase price above $500,000.
  • If the property has 3 or 4 units, the minimum downpayment is 10%. of the total purchase price.

The minimum downpayment come must own resources and cannot be borrowed; however, a gift of a downpayment from an immediate relative is acceptable for dwellings of 1 to 4 units.

What is the Qualification Criteria?

If your credit is excellent, your maximum monthly housing costs, including Principal, Interest, Property Taxes, Heating (P.I.T.H.) and 50% of applicable condominium fees, may be up to 39% of your gross household income (Gross Debt Service (GDS) ratio).

With good credit again, total debt load can be a maximum of 44% of your gross household income. The Total Debt Service (TDS) ratio GDS ( see above) plus payments on all other debt / gross annual household income; e.g. (Car payments, credit card debt, student loans etc.…).

If your credit score is below a certain level, this number can be reduced back to between 32 and 34% for your GDS maximum and 40 to 42% for your TDS maximum depending on the lender.

You also need to think about closing costs (legal and land transfer fees) equivalent to 1.5% to 4% of the purchase price. Closing costs include but are not limited to lawyer fees, GST as applicable, land transfer tax if applicable, municipal property tax adjustments, home insurance etc. and available funds must be verified to the lender.

Purchase Price

Downpayment Requirement

Up to & including $500,000                          

5% - up to $25,000

$600,000

 5.8% - $35,000

$700,000

 6.4% - $45,000

$800,000

 6.9% - $55,000

$900,000

7.2% - $65,000 

$999,999

7.5% - $75,000

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