In February 2016, new rules were implemented in Canada that changed the minimum down payment requirements for when you purchase a home. Home purchases are now separated into three categories in terms of down payments:
*Examples above assume amortization over 25 years and an interest rate of 3.14 percent based on current market rates.
CMHC fees (also known as mortgage default insurance payments) are required for any mortgage where you put less than 20 percent down on your home. These fees added into your mortgage payment and paid off throughout the course of your mortgage.
Simply put, the more you are able to put down on your mortgage, the more money you will save in the long run with lower (or no) CMHC fees and smaller interest payments. However, for some people, immediate home ownership is more important than the long-term fees; sometimes saving up that 20 percent is not feasible. If you need help deciding the best option for you, please contact our office to book your free consultation.