For many Edmontonians, the hardest part of buying a home is coming up with the funds necessary for a down payment (especially if it’s their first home). Homebuyers who opt to put down less than 20% of the overall purchase price will be required to include Mortgage Default Insurance into their mortgage.

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While this type of insurance protects your lender in the event of mortgage payment default, it also helps make homeownership possible (and in many ways, more affordable).

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By paying Mortgage Default Insurance, CMHC, Genworth and Canada Guaranty will enable you to mortgage up to 95% of a home’s overall purchase price. This means you can purchase a home with as little as 5% down (the minimum 5% down payment required).

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Ex: On a home with a purchase price of $250,000, with the 5% minimum, you’ll require a down payment of just $12,500.

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While Mortgage Default Insurance will result in a slight increase to your monthly mortgage costs, it does make homeownership possible for thousands of Edmontonians, who would have otherwise had to wait much longer.

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How To Qualify

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Once the following conditions are met, you’ll be eligible to apply for either CMHC, Genworth, or Canada Guaranty Insurance:

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• The home to be occupied as your principal residence is located within Canada.

• Your home-related expenses, including mortgage payments, property taxes and heating costs do not exceed more than 39% of your gross household income. This is referred to as your Gross Debt Service or GDS Ratio.

• Your total monthly debt load, including car payments, credit card interest, housing expenses, student loans, etc., does not exceed 44% of your gross household income. This includes the debt associated with your mortgage payment and is referred to as your Total Debt Service or TDS Ratio. 

• You must provide proof of the minimum 5% down payment as well as an additional 1.5% (of overall purchase price) to cover closing costs (legal fees, title insurance, appraisals, etc.).

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Note: Your Mortgage Default Insurance payment will vary according to the purchase price of the home and your down payment. To determine actual costs, give us a call or visit the CMHC, Genworth, and Canada Guaranty website for more information.