July 31, 2014Phone: 416-626-7800

Prime rates
   CMHC (Canada Mortgage and Housing Corporation) Guidelines

CMHC & Genworth Financial Canada


CMHC


Overview

For most people, the hardest part of buying a home - especially a first home - is saving the necessary Down Payment.

If you have less than 25% of the purchase price to put down, you will be required to purchase Mortgage Insurance through your lender. Mortgage insurance protects your lender against payment Default.

By providing Mortgage Loan Insurance to lenders, CMHC enables you to finance up to 95% of the purchase price of a home. This means you can buy a property with as little as 5% down. So if the cost is $125,000, you would need a down payment of just $6,250! CMHC Mortgage Loan Insurance has made home ownership possible for millions of Canadians.

How do you qualify?

Once the following conditions are satisfied, you are eligible for CMHC Mortgage Loan Insurance:

  • The home which is to be occupied as your Principal residence is located in Canada.
  • You have a down payment of at least 5% of the purchase price of the property.
  • Your home-related expenses do not exceed 32% of your gross household income.
  • Your total monthly debt load does not exceed 40% of your gross monthly household income.

You are able to pay Closing costs equivalent to at least 1.5% of the purchase price. See

Just 5% down?

Yes, you can buy a home with a down payment of less than 10%:

Single-family dwelling: 5%

Two-unit dwelling: 7.5%

Minimum Equity of 5% from your own resources is required. Gifted down payments from an immediate relative are  acceptable.

INSERT:

Mortgage Brokers have access to various types of mortgage products and services.  Some of these offer options where CMHC insurance is not necessary.  For more information, contact Clearview Mortgage Corporation Tel. 416-626-7800 

For most people, the hardest part of buying a home - especially a first home - is saving the necessary Down Payment.

If you have less than 25% of the purchase price to put down, you will be required to purchase Mortgage Insurance through your lender. Mortgage insurance protects your lender against payment Default.

By providing Mortgage Loan Insurance to lenders, CMHC enables you to finance up to 95% of the purchase price of a home. This means you can buy a property with as little as 5% down. So if the cost is $125,000, you would need a down payment of just $6,250! CMHC Mortgage Loan Insurance has made home ownership possible for millions of Canadians.

How do you qualify?

Once the following conditions are satisfied, you are eligible for CMHC Mortgage Loan Insurance:

  • The home which is to be occupied as your Principal residence is located in Canada.
  • You have a down payment of at least 5% of the purchase price of the property.
  • Your home-related expenses do not exceed 32% of your gross household income.
  • Your total monthly debt load does not exceed 40% of your gross monthly household income.

You are able to pay Closing costs equivalent to at least 1.5% of the purchase price. See

Just 5% down?

Yes, you can buy a home with a down payment of less than 10%:

Single-family dwelling: 5%

Two-unit dwelling: 7.5%

Minimum Equity of 5% from your own resources is required. Gifted down payments from an immediate relative are  acceptable.

INSERT:

Mortgage Brokers have access to various types of mortgage products and services.  Some of these offer options where CMHC insurance is not necessary.  For more information, contact True

Clearview Mortgage Corporation Tel. 416-626-7800

How Much Does CMHC Mortgage Loan Insurance Cost?

To obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, your lender will pass these costs on to you. Your lender will give you the exact price when you apply for a mortgage.

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.

Remember: without mortgage insurance you may avoid the insurance premium but you?ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved.

A 10% premium refund and extended amortization periods of up to 40 years without surcharge may be available when CMHC Mortgage Loan Insurance is used to finance an Energy-Efficient Homes.

Financing Required
Premium % of Loan Amount
Up to and including 65%
0.50
Up to and including 75%
0.65
Up to and including 80%
1.00
Up to and including 85%
1.75
Up to and including 90%
2.00
Up to and including 95%
     Traditional Down Payment
     Flex Down
 
2.75
2.90
Up to and including 97%
     Traditional Down Payment
     Non-Traditional Down Payment
 
2.90
3.00
Up to and including 100%
3.10
Secured Line of Credit Surcharge
     Non-amortized repayment option:
     5 years
     10 years
 
 
0.25
0.50
Extended Amortization Surcharges
     Greater than 25 years,
     up to and including 30 years
     Greater than 30 years,
     up to and including 35 years
     Greater than 35 years,
     up to and including 40 years
 
 
0.20
 
0.40
 
0.60
*Premiums in Ontario and Quebec are subject to provincial sales tax ? the sales tax cannot be added to the loan amount.

See your mortgage professional for terms and conditions.

Call  The Mortgage Store for more details on CMHC Insurance, or, how to avoid paying the premiums Tel.416-626-7800

  Genworth Financial Canada,


Business For Self (Alt. A)

With a strong emphasis placed on reasonability of income type, amount, and durability, Self-Employed borrowers and Commissioned Sales people that cannot provide traditional income verification may now qualify for a high ratio mortgage for purchase or refinance purposes.

Acceptable loan purpose:

  • Purchase, Purchase Plus Improvements
  • Progress Advance 
  • Refinance for repayment of existing mortgage debt, home renovations, debt consolidation, or asset enhancement
    • Equity takeout limited to $200,000
    • Where the loan purpose is to consolidate existing first and second mortgages, the maximum LTV will apply

Loan-to-value ratio limits:

  • Purchase 1-2 Units: 95% LTV
  • Purchase 3-4 Units: 90% LTV 
  • Progress Advance (Max. 2 Units): 95% LTV
  • Refinance 1-4 Units: 90% LTV 

Maximum Loan Amounts:

  • Do not apply with the exception of the following loan purposes:
    • Secondary Homes (Type A):
      • Metro Toronto, Metro Calgary & Metro Vancouver: $700,000
      • Rest of Canada: $600,000
    • HELOC (maximum credit limit):
      • Metro Toronto, Metro Calgary & Metro Vancouver: $700,000
      • Rest of Canada: $600,000

Eligible properties:

  • Owner-occupied properties: maximum 4 units where at least 1 unit must be occupied as the principal residence
  • Secondary home: maximum 2 units. Property may not be used for rental purposes. Only Type A properties are eligible (for more details, please refer to the Secondary Home overview )
  • Existing and new construction
  • Readily marketable residential dwellings, located in markets with demonstrated ongoing re-sale demand
  • Older homes (pre 1950) must have been substantially modernized and the estimated remaining property (economic) life must be at least 25 years
  • New construction must be covered by a Genworth approved New Home Warranty Program

Occupancy:

  • Owner occupied primary residence or secondary home.  All applicants used to qualify must occupy the property.
  • Spousal guarantors acceptable provided they occupy the subject property
  • Non-occupant co-borrowers or guarantors not permitted

Amortization options:

  • Up to 40 years

Terms/qualifying interest rates:

  • Fixed, standard variable, capped variable, or adjustable rate mortgages are permitted

Borrower qualification:

  • Income declared by the borrower must be reasonable for the industry and occupation/type of business
  • Strong credit and credit score (for recommended bureau score requirements see the premium matrix below)
  • For HELOC applications, a minimum 650 bureau score is recommended up to 90% LTV; 700+ bureau score is recommended for 90.01-95% LTV
  • Genworth will average the scores pulled from both credit bureaus for each borrower, and the minimum score requirement will apply to all borrowers on the application
  • No mortgage, installment or revolving credit delinquencies appearing on the credit bureau in the past 12 months
  • No reported defaults on residential mortgages for the past 7 years
  • No previous bankruptcy
  • No gifted / borrowed down payment allowed
  • Lender to ensure borrower(s) have no tax arrears (recent NOA or a signed affidavit by the borrower(s) will suffice)
  • Maximum two (2) Genworth-insured Alt. A mortgages

GDS/TDS Guidelines

Bureau Score

GDS

TDS

680+

No limit

44%

600 - 679

35%

42%

Self employed borrowers:

  • 2-years self-employed tenure is recommended, however will consider borrowers with less than 2-years BFS tenure depending on the length and type of previous employment.
  • One (1) form of written third party documentation confirming self-employment tenure must be on file  
  • Lender is required to capture the borrower's "Stated" income and submit to Genworth as part of the application.
  • The "Stated" income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
  • Reasonableness of the income is a critical factor in the approval of the loan as is the borrower?s ability to service the loan and all other obligations

Commissioned sales:

  • A commissioned sales applicant is defined as someone who derives 100% of their income from a commissioned source
  • The lender is responsible for ensuring that the borrower is a commissioned sales applicant as defined above, with a minimum of two years tenure, for example by way of letter of employment, T1 Generals or T4's
  • Lender to ensure borrower(s) have no tax arrears (recent NOA will suffice)
  • Commissioned sale applicants who are paid a salary plus commission are NOT eligible under this program and must qualify in the usual manner (e.g. GDSR/TDSR and income confirmation will be required)
  • Lender is required to capture the borrower's "Stated" income and submit to Genworth as part of the application.
  • The "Stated" income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
  • Reasonableness of the income is a critical factor in the approval of the loan as is the borrower?s ability to service the loan and all other obligations

    Premium rates:

    • Premiums must be paid in full at closing, and may be capitalized into the mortgage balance.
    • Where the first and second mortgages are insured concurrently, the total premium will be equal to the amount that would be required if insured as a single first mortgage


    Premium matrix:


      Single Upfront Premium
    LTV Ratio Bureau Scores Purchase** Refinance** Top-Up Premium
    90.01% - 95% 700 6.00% N/A 8.50%
    85.01% - 90% 650 4.75% 4.75% 7.00%
    80.01% - 85% 620 2.90% 2.90% 5.50%
    75.01% - 80% 620 1.64% 1.64% 3.85%
    65.01% - 75% 600 1.00% 1.00% 2.60%
    < 65% 600 0.80% 0.80% 1.50%
    * A .20% premium surcharge will be applied for every 5 years of amortization beyond the traditional 25 - year mortgage amortization period

    ** For HELOC applications, a 0.25% surcharge will be applied for a 5-year HELOC term and a 0.50% surcharge for a 10-year HELOC term

    Portability:

    • Mortgage default insurance is portable under the following conditions;
      1. When porting from an ALT. A to another ALT. A mortgage, the premium will be the lesser of:
        • The increase in the loan amount multiplied by the top-up premium rates defined in the table above, or
        • The new loan amount multiplied by the full premium rate
      2. When porting from an ALT. A loan to an existing standard Genworth insured loan, the premium will be the lesser of:
        • The increase in the loan amount multiplied by our standard premium top-up rates as described in our Portability feature Product Overview, or
        • The new loan amount multiplied by the full standard premium rate
      3. When porting from an existing standard Genworth insured loan to an ALT. A loan, the premium will be the lesser of:
        • The outstanding mortgage balance multiplied by 1.5% + the top-up amount multiplied by the top-up premium rate, or
        • The new loan amount multiplied by the full premium rate

    Example for Scenario #3:

    Outstanding mortgage balance = $100,000; Top-up mortgage amount = $80,000; New Loan Amount = $180,000 (90% LTV)

    1. ($100,000 x 1.5%) + ($80,000 x 7.0%) = $7,100
    2. ($180,000 x 4.75%) = $8,550
    Premium Payable is $7,100

    When porting with a top-up mortgage amount, the blended amortization option is available

    Assumptions/assignments:

    • Mortgages issued under this program may be assumed. We will continue to provide insurance coverage if the mortgage is sold to an investor, provided servicing continues with a Genworth approved lender in compliance with Master Policy terms.

    Ineligible loan purpose/type:

    • New to Canada
    • Family Plan
    • Cashback Equity
    • Vacation Homes
    • Homebuyer 100
    • Investment Property Program

    Documentation/information requirements:

      Sole Proprietorship
    • A one-owner operation where the owner directs all the activities of the business, assumes all authorities and obligations, and is liable for its business debts. The sole proprietor income is reported to revenue Canada on the standard tax return (T1 General) together with Revenue Canada's required statement of business or professional activities.
    • Documentation requirements - Any one of the following:
      • Business License
      • Business Credit Report
      • GST/HST Return Summary
      • T1 Generals with statement of business activities attached for a minimum 2 years
      • Audited Financial Statements for the last 2 years, prepared and signed by a CA
    • Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears

      Partnerships
    • Partnerships are businesses owned by two or more individuals who share the profits or losses of the business operation. The partnership income is reported to Revenue Canada on the standard tax report (T1 General) together with Revenue Canada's required statement of business or professional activities, which reflects the percentage of the NET income or loss for each partner of the enterprise.
    • Documentation requirements - Any one of the following:
      • Business License
      • Business Credit Report
      • GST/HST Return Summary
      • T1 Generals with statement of business activities attached for a minimum 2 years
      • Audited Financial Statements for the last 2 years, prepared and signed by a CA
    • Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears

      Corporations
    • A limited company or corporation is a legal entity, separate from the persons (all shareholders) who own it. The business can own assets, enter into contracts and conduct business transactions in its own capacity. The company is called limited because the liability of the shareholders is limited to their investment. All provincial Corporations must obtain articles of incorporation from the province in which they are registered or may be federally incorporated. The applicant's personal income will be reported by T4 from the corporation.
    • Documentation requirements - Any one of the following:
      • Articles of incorporation
      • Business Credit Report
      • Audited Financial Statements for the last 2 years, prepared and signed by a CA
    • Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears

    Homebuyer 100 Mortgage Insurance Program

    Genworth will now be providing mortgage insurance on an innovative new program accessible to qualified homebuyers with no down payment.

    Acceptable loan purpose

    • Purchase transactions

    Loan-to-value ratio limits

    • Maximum 100.00% LTV
    • Insurance premium can be capitalized into the mortgage.

    Eligible properties

    • Owner occupied, primary residences
    • Maximum two units
    • New construction or existing properties
    • Secondary homes - Type A (please refer to the Secondary Home Product Overview for eligible properties)

    Terms/qualifying interest rates

    • For terms less than 3 years, the qualifying interest rate is the greater of three-year posted rate or contract rate
    • For terms of three years or more, the contract rate is used
    • Fixed, standard variable, capped variable and adjustable rate mortgages are permitted

    Amortization options

    • Up to 40 year amortization available

    Coverage

    • 100%  

    Premium rates*

    LTV ratio Premium Rate Port Top-up Premium
    97.01% - 100% 3.10 3.10% 4.80 4.80%
    Premium is non-refundable.
    * a .20% premium surcharge will be applied for every 5 years of amortization beyond the traditional 25 - year mortgage amortization period.

    Borrower qualification

    • Strong credit and credit score (Recommended for credit scores of 680 or greater)
      • Two trade lines with at least two years credit history is recommended
      • No prior bankruptcies
    • Non-residing guarantors are not permitted. Non-residing co-borrowers are acceptable (must be an immediate family member and on title)
    • Closing costs should be from own savings

    GDS/TDS Guidelines

    Bureau Score

    GDS

    TDS

    680+

    No limit

    40%

    Documentation requirements

    • Standard documentation requirements apply
    • Genworth may request that the lender provide a copy of the required documentation on a case-by-case basis

    Portability

    • Mortgage default insurance is portable under this program
    • The premium will be calculated using the lesser of the Premium on the Total Loan Amount less applicable Premium Credit or the Premium on the Top-Up Portion
    • Top-Up Premium is only applicable if the original mortgage was insured at 95.01-100% LTV. Premium Credit may still apply.
    • For complete details, please refer to Genworth's Portability Feature Product Overview

    Assumptions/Assignments

    • Mortgages issued under this product may be assumed
    • Insurance coverage will continue in the event of a sale of the mortgage to an investor provided servicing continues with a Genworth approved lender in compliance with Master Policy terms

    Eligible Products **

    • First Mortgage Owner Occupied 1 & 2 units
    • Extended amortizations up to 40 years
    • Insured Progress Advance
    • Purchase Plus
    • Secondary Homes (Type A) 

    ** For specific underwriting guidelines related to the above eligible products, please refer to the applicable product overview

    Ineligible Products

    • Alt A
    • Cashback Equity
    • Cash - Out refinance
    • CreditAssist  
    • Family Plan
    • HELOC
    • New to Canada
    • Second mortgages
    • Vacation Homes (Type B) 
    • Investment Property Program

    New To Canada

    Now qualified homebuyers who have immigrated or relocated to Canada can qualify for Genworth default mortgage insurance with as little as a 3% down payment.

    Acceptable loan purpose

    • Purchase transactions

    Loan-to-value ratio limits

    • Maximum LTV ratio - 97.00%

    Eligible properties

    • Maximum two units where at least one unit must be occupied as the principal residence
    • New construction or existing properties

    Terms/qualifying interest rates

    • Fixed, standard variable, capped variable and adjustable rate mortgages are permitted
    • For terms less than 3 years, the qualifying interest rate is the greater of three-year posted rate or contract rate; for terms of three years or more, the contract rate is used

    Premium Rates

    LTV ratio Premium rate*
    Up to 65% 0.50 0.50%
    65.01% - 75% 0.65 0.65%
    75.01% - 80% 1.00 1.00%
    80.01% - 85% 1.75 1.75%
    85.01% - 90% 2.00 2.00%
    90.01% - 95% 2.75 2.75%
    95.01% - 97% 2.90%
    Premium is non-refundable.
    * a .20% premium surcharge will be applied to the above premium rates for every 5 years of amortization beyond the traditional 25-year mortgage amortization period


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