Purchasing a Property

Insuring Your Loan to Reduce Your Downpayment

As a general rule, when you purchase a home, you must make a minimum downpayment equivalent to 20% of the purchase price of the property. A conventional mortgage loan cannot exceed 80% of this price.

However, if you cannot pay this amount, you can obtain a high-ratio mortgage loan by purchasing mortgage loan insurance from the Canada Mortgage and Housing Corporation (CMHC) or GE Mortgage Insurance Canada. The borrower will take care of making the request. In this way, you may obtain a mortgage loan of up to 95% of the purchase price or the market value of the property you wish to purchase.

The minimum downpayment to purchase a residence is therefore 5% of the lesser of the following amounts:

• The purchase price of the residence;
• The appraisal of the residence.

Who pays the insurance premium to CMHC or GE Mortgage Insurance Canada?

The borrower pays the premium, which is generally added to the loan amount. The premium can reach a maximum of 3.25% of the capital borrowed.

For further information

GE Mortgage Insurance Canada
Private insurer of mortgage loans.

Canada Mortgage and Housing Corporation (CMHC)
Crown corporation offering mortgage loan insurance products.