What changes have taken place with regard to the CMHC program?

In 1998 Canada Mortgage and Housing Corporation, Canada's Federal government body that insures loans for people with a down payment of less than 25% has made some changes to their program. First, according to the old rules insurance premiums were such that people putting down between 5% and 15% would pay a 2.5% premium which is added to the mortgage and therefore amortized over 25 years. With the new rules, those individuals putting down between 5% to 10% have to pay a premium of 3.75% and those putting down between 10 and 15% will still pay 2.5%.

The positive point associated with this change is that second time buyers can now put down 5% and they will pay the same insurance premiums as outlined above. Previously, second time buyers had to put a minimum downpayment of 10%. Therefore, everyone can now put down 5% but the premiums for individuals putting down less than 10% are 3.75% of the total mortgage amount.

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