Buying Your Home With Just 5% Down

High Ratio Mortgage - CMHC & GE Capital Insurance

What is High Ratio Financing?
If you do not have enough saving for the 25% down payment for a traditional mortgage, you may qualify for a high ratio mortgage with a down payment as little as 5%. High ratio mortgages must be insured through either CMHC (Canada Mortgage & Housing Corporation) or GE Capital Insurance. This insurance is paid for by the borrower and is for the lender, protecting them from the risk of the mortgage not being paid.

The insurance premium is calculated as a percentage of the mortgage amount, depending on the loan-to-value ratio, and may be added to the principal amount of the mortgage. The premiums are as follows:

Loan to Value Premium (As of July 14, 2003 the premiums have been reduced)

From 75%-80% 1.00% (down from 1.25% prior to July 14, 2003)
From 80%-85% 1.75% (down from 2.00% prior to July 14, 2003)
From 85%-90% 2.00% (down from 2.50% prior to July 14, 2003)
From 90%-95% 3.25% (down from 3.75% prior to July 14, 2003)

You must insure the entire loan, not just the amount that is above 75% of the purchase price. Most lenders will let you roll the insurance premium into your mortgage. If you do, though, you'll end up paying a good deal of interest on the insurance fee as well.

How Do You Qualify?

Home Requirements

• Maximum Price of home may not exceed $300,000 in greater Vancouver and Victoria Areas. (Where the down payment is 10% or more, maximum price ceiling limits do not apply.)
• The home you plan to purchase must be your principal residence, and located in Canada.

Personal Requirements

• You can make a down payment of a minimum of 5%
• You have been at your current job for a minimum of 1 year.
• Your home-related expenses do not exceed 32% of your gross household income (GDS-Gross Debt Service) including payment of: principal + interest + property taxes + heat + 50% of condominium fees.
• Your total monthly debt load does not exceed 40% of your gross monthly household income (TDS-Total Debt Service) including payment of principal + interest + property taxes + heat + 50% of condominium fees + payments of all other debts.
• You are able to pay closing costs equivalent to at least 1.5% of the purchase price.

Once qualified the minimum initial loan term is 3 years. For more information visit the CMHC Website or call: (604) 731-5733.

Other Tricks & Tips for Successful Home Buying

Let Me Help Find the Right House for You...an easy to fill out form highlighting your "Dream Home".

Ten Steps to Buying Your Home...find out the most important steps in planning the purchase of your first home.

Getting Pre-approved for a Mortgage...find out how you can increase your bargaining power.

Saving Money on Your Mortgage...helpful suggestions to reduce the amount of interest you pay.

Closing Costs...don't forget about closing costs when you are purchasing your home.

Avoid Paying the Property Transfer Tax...you might be eligible for an exemption of up to $3,500.