Homeownership: Even More Accessible and Affordable

CMHC is proud to be Canada’s National Housing Agency and Canada’s mortgage loan insurer of choice. Since CMHC introduced mortgage loan insurance to Canada in 1954, it has been used to facilitate the financing of nearly 9 million homes helping Canadians achieve their dreams of homeownership.

CMHC continues to lead the way with mortgage loan insurance product and service enhancements to promote housing accessibility and choice for Canadians. These enhancements provide our housing finance partners with responsible product and service solutions to better serve customers and grow your business. In this context, CMHC is very pleased to introduce the latest enhancements to its suite of mortgage insurance products:

Elimination of Homeowner High Ratio Application Fees

CMHC is again reducing the costs of homeownership, this time by eliminating application fees on all high ratio homeowner mortgage loan insurance products. This results in the reduction in financing costs of typically $165, but up to $235 depending on the type of insurance transaction. Combined with the premium reductions over the last three years, which reduced premium costs by up to 30%, the elimination of homeowner high ratio application fees demonstrates our continuing commitment to keep cost of homeownership affordable for Canadians.

Interest Only Homeownership Product

CMHC's interest only homeowner mortgage insurance product is designed to allow lenders to provide borrowers who have a strong history of responsibly managing their credit, with flexibility in repaying their mortgage loan. Similar to CMHC's existing Line of Credit product that has been in the marketplace since 2003, qualified borrowers will be able to pay interest only for the first 10 years of their mortgage. Following the interest only period, principal and interest payments will begin and will be sufficient to ensure the balance is paid in full within 25 years of the date the mortgage was originally initiated.

This feature provides borrowers with cash flow flexibility during the early years of a mortgage in a prudent and responsible manner. Interest only mortgages will be available only for borrowers with a strong track record in managing their debt and who can afford to repay the mortgage principal following the initial interest only period. CMHC will qualify borrowers based on the full principal and interest payment required to repay the loan in full over 25 years.

Extended Homeowner Amortization Periods

Anticipating the needs of Canadians, earlier this year CMHC introduced to the marketplace extended amortization periods of up to 30 years for purchase transactions through a pilot product. The pilot was a great success and has helped improve access for a significant number of Canadians by lowering monthly payments. Accordingly, CMHC is pleased to announce that its 30 year flexible amortization offer is now an ongoing product offering.

Building on the success of the pilot, CMHC is also pleased to introduce extended amortization periods of up to 35 years. Extended amortization flexibilities are available on homeowner purchase and refinance transactions (excluding Line of Credit) and can be combined with our Flex Down product.

Helping Newcomers to Canada Feel at Home

Newcomers to Canada with permanent resident status continue to have access, through their Approved Lender, to all CMHC Homeowner Mortgage Loan Insurance products without any additional borrower eligibility requirements irrespective of the length of time the borrower has been in Canada.

Where there is limited Canadian credit history and where foreign credit bureaus are not available, CMHC has and will continue to consider alternative payment histories, regardless of the loan-to-value ratio. For instance, CMHC assesses the borrower’s willingness and ability to repay through a variety of sources of information including rent payments, and other regular and periodic payment obligations and/or savings.

Enhancements for Managing Outstanding Fees and Premiums

To streamline the process for the payment and collection of outstanding homeowner mortgage loan insurance fees and premiums, effective August 1, 2006 CMHC’s Auto Cancellation Edit (ACE) will be implemented for all Approved Lenders. Through the automatic cancellation of applications for homeowner mortgage loan insurance where CMHC has not received funds (application fee, premium, or taxes) 95 days following the closing date of the transaction, ACE provides an effective means of managing unfunded CMHC applications and results in more meaningful and accurate reporting and streamlined administration for lenders.

Elimination of Application Fees for Portfolio Substitution Pools

In April 2005, CMHC eliminated application fees for all new portfolio insurance pools and reduced premiums by up to 50%.

CMHC is pleased to announce that effective immediately, the costs associated with portfolio insurance will be further reduced through the elimination of the current $25 application fee per loan on portfolio substitution pools.

CMHC — Home to Canadians

CMHC is Canada’s National Housing Agency – We are Home to Canadians. In everything we do, we help improve housing quality, affordability and choice for Canadians. You can count on CMHC’s leadership, experience and expertise.

Put that strength and experience to work for you. Choose CMHC — 1 888 GO emili