CMHC Insurance

[Alvaro Sanchez]

Do you I still need CMHC insurance? In all cases traditional financing is only 55% Yet, the LTV is

80% are they (Banks) force to request you to get insurance?

http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_002.cfm




Case A:


Finance a purchase with 1[sup]st Mortgage from traditional financing (Bank - 55%) plus 2[sup]nd from private lender (arms-length RRSP Mortgage ` 25%) for 80% LTV on closing. 20% cash down payment.


Case B:


Finance a purchase with 1[sup]st Mortgage from traditional financing (Bank - 55%) plus 2nd[/sup] from private lender (Loan ` 25%) for 80% LTV on closing. 20% cash down payment.


Case C:


Finance a purchase with 1st[/sup] Mortgage from traditional financing (Bank -55%) plus 2nd[/sup] from own Equity LOC (25%) for 80% LTV on closing. 20% cash down payment.


Regards

 

[bizaro86]

CMHC insurance rules and premiums vary depending on the type of property and type of owner.



An owner-occupier can still get 5% down CMHC, and a residential (usually 4 units or less) landlord can get 20% down CMHC.



The rules are different for larger multi-family properties, and my understanding (but not personal experience) is that these properties usually require at least (and often more) than 20% down for CMHC insurance, although I believe 15% down is theoretically allowed.



Regards,



Michael

 

[RussellWestcott]

Hello, I'm not sure I fully understand your question... are you asking if CMHC fees are mandatory or not?



Perhaps some more information... I am assuming you are talking about multi-family mortgages in your scenarios (6 units or more). If that is the case almost everyone I know takes the CMHC insured mortgage, because you can can get better terms and a better interest rate, and if you are keeping the property for more than 5 years, you will be better off with the CMHC mortgage... plus at the end of the day many banks are not lending money unless they have the backing of CMHC



If you are speaking of single family properties... if you are 80% LTV or lower you typically do not have to pay the premiums... however more and more banks are requiring you take CMHC insurance in order to get the money. I would not be surprised in the near future any mortgage greater than 65% LTV will have to take the insurance.



Remember the golden rule of banks... They who have the gold makes the rules

 

[Alvaro Sanchez]

Sorry just to clarify the question:



These are condo/single family properties (rentals non-owner occupied). What I am trying to find out is if the banks, would still ask for CMHC insurance at 55% but because a 2nd at 25% exists at closing (the true financing is at 80%) are the bank required by law to ask for insurance with this structure?



Regards

 

[RobMacdonald]

In each case you will not require the insurance. This assumes you would
qualify with a chartered bank or 'A' lender. There are some lenders
that will require CMHC insurance regardless of LTV, and will expect the
client to cover the premium.



Overall, if your first mortgage is 55% LTV, and you're puting 20% cash into the deal, then you will avoid the CMHC premium. Banks are not required to have it for 80% LTV or less.

 

[ChrisDavies]

Some lenders will also require insurance if you're going for a longer amortization period.