What is the CMHC Mortgage Loan Insurance?

Are you confused as to what the CMHC (Canadian Mortgage and Housing Corporation) mortgage loan insurance is? Heard the term but you don't really understand what it is? It's important to get a good understanding of what it is so let's break it down to the main points.

What is it?

A one-time premium that can be paid fully upfront or be added to your mortgage so that it is included in your monthly payments.

What is its purpose?

To protect lenders against mortgage defaults.

What is it mandatory for?

For all individuals receiving a mortgage from a registered institution who have a down payment between 5% to 19.99%. Anyone with less than 20% of the sale price of the home, will pay this insurance.

Does it provide any benefits?

Without the CMHC Mortgage Loan Insurance, you wouldn't be able to buy or refinance your home unless you placed a down payment of 20% or more. It also helps keep mortgage interest rates low and allows for down payments that are less than 20%.

Who else offers mortgage loan insurance?

Gen worth and Canada Guaranty

Are there any other resources?

Here is the table that determines your insurance premium:
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm
Here is premium calculator:
http://www.cmhc-schl.gc.ca/en/co/buho/buho_013.cfm

What Should I Be Aware Of?

Talk with your financial representative at the mortgage company you are with. Increasing your down payment just a little can decrease your CMHC fees significantly. Work with them to find out what is right for you.