Five Per Cent Down Payment Program for Canadians

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Five Per Cent Down Payment Program for Canadians

Post: # 4695Post Flipping4Profit.ca
Tue Jul 24, 2012 5:07 pm

Five Per Cent Down Payment Program for Canadians

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Program

With as little as five per cent down
payment, from personal or other sources
(see below for eligible other sources), all
home buyers have access to mortgage
insurance enabling them to enter the
housing market, as long as they can meet
the standards for a five year fixed-rate
mortgage.

Details

• Mortgage insurance for 95 per cent
mortgages is available to both first time
and repeat home buyers. Homebuyers
have the option of using personal sources,
such as savings or gifts, or other sources,
such as lender incentives, borrowed
funds/credit, or sweat equity (the amount
of money spent to help construct the
home) for the required five per cent down
payment.

• Buyers using the Program may consume
up to 32 per cent of their gross monthly
household income for payments of
principal interest, property taxes and
heating, and total debt load cannot exceed
40 per cent of monthly household income.

• Buyers using the Program must be
able to qualify for a five year fixed-rate
mortgage even if they choose a mortgage
with a lower interest rate and shorter term.

• Insurance premiums on loans for 95
per cent of the lending value of the house
where the five percent down payment
comes from personal sources will be 2.75
per cent of the mortgage loan. Insurance
premiums on loans for 95 per cent of the
lending value of the house where the
five percent down payment comes from
other sources will be 2.9 per cent of the
mortgage loan. This premium can be
added to the mortgage.

• Borrowers are required to demonstrate,
at the time of application, their ability to
cover closing costs equal to at least 1.5%
of the purchase price.

• Where the minimum equity requirement is
being met by way of a financial gift,
the funds must be in possession of
the borrower 15 days before making an offer
to purchase.

• For homeowners who used the Program
to purchase their home, the maximum
amount that can be withdrawn if
re-financing their mortgage is 85 per cent
of the value of their home.

• The Five Per Cent Down Payment
Program is not available for non-owner
occupied properties. These properties
require a minimum down payment of 20
per cent.

• Effective July 9th, 2012the maximum
allowed amortization period for mortgages
with less than 20 percent down payment
is 25 years.

For more information call CMHC at
1-800-668-2642 or access through
http://www.cmhc.ca


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