First Time Home Buyers Benefit from Lower Costs

Effective April 22, CMHC is lowering mortgage loan insurance premiums for the second time in two years. First time buyers with 5% down will benefit from a further 15% reduction for a total of 30% over the past two years.

How am I, as a consumer, eligible for the premium reduction?

You can benefit from the premium reduction provided all of the following conditions apply:

1. You are purchasing a home (including porting an existing CMHC insured mortgage to a new property)
   
   
2. Your down payment was less than 10% of the purchase price of your home.
   
   
3. You have a CMHC insured mortgage and your mortgage is closing on or after April 22nd, 2005.

   Closing Date: The date at which the sale of a property becomes final and the mortgage is funded.

What is the process to receive the refund?

Eligible borrowers are not required to make any application to CMHC for the refund. During an initial transition period, CMHC will provide the refund equivalent to this new reduction in premium directly to eligible borrowers. Your refund will come in the mail.

Following the transition period, the reduction in premium will be applied at the time of the mortgage application; eliminating the need for a refund.

What is the expected turnaround time for CMHC to issue the premium refunds?

You can expect to receive the premium refund within four to six weeks after your mortgage closing date.

Is my mortgage eligible both for the new premium reduction and the Energy Efficient Mortgage refund?

Yes. If you meet the qualifying criteria stated above for the premium reduction you will receive the refund directly from CMHC. The Energy Efficient Mortgage refund is a different program. In order to be eligible the home buyer must meet certain criteria and apply separately for this refund. Find out more about CMHC's Energy Efficient Mortgage refund and how you can qualify. If you do qualify for both refunds, you will receive two separate cheques from CMHC.

How much is the actual premium reduction?

The Mortgage Loan Insurance premium for a homeowner mortgage with less than a 10% down payment on the home has been reduced from 3.25% to 2.75%. Under CMHC's Flex Down product, the premium has been reduced from 3.40% to 2.90%.

Flex Down: Eligible borrowers can access the minimum 5% down payment from a variety of sources, including borrowed funds or lender incentives, provided the funds are at arm's length from (and not tied to) the purchase or sale of the property.

The savings could be substantial. For example:

Terry and Pat have found their dream home. They have done their homework and taken into account all the other costs of buying their dream home. They are prepared to make a 5% down payment and have met with their lending institution and asked that their mortgage be CMHC-insured. The table below illustrates the cost savings due to the reduction in the CMHC Mortgage Loan Insurance premium:

Amount of CMHC insured mortgage	$120,000
Cost at old premium (3.25%)	$3,900
Cost at new premium (2.75%)	$3,300
Savings	$600

The calculator below can help you estimate the premium refund.