• Buyers can put a down payment of as little as 5% of the purchase price provided that you and the property are approved by CMHC for low down payment programs.
  
• The building has to qualify for a high-ratio mortgage. Some types of properties, like co-operatives and leasehold properties require a minimum of between 25%-30% of the purchase price as a down payment in order to qualify for a loan. Brand new buildings need to be covered under a building warranty, and specific buildings may need additional approval by CMHC for a low down payment mortgage.
  
• There is an added cost to cover the insurance premium for high-ratio mortgages. High-ratio mortgages have to be insured by Canada Mortgage and Housing Corporation (CMHC) or approved alternate mortgage insurer against foreclosure before the lender will issue you the mortgage. This insurance premium for the high-ratio mortgage is on a sliding scale depending on the size of the mortgage. The cost of the insurance is usually just added to final total of the mortgage.

5% Down Program

• The borrower must be a landed immigrate or Canadian Citizen.
  
• Financing is on as much as 95% of the purchase price or appraised value, whichever is less.
  
• Borrowers must qualify for mortgage payments based on a three year "posted mortgage rate, or actual rate if they select a 3 year or longer " fixed" term.  Maximum amortization of 25 years.
  
• The proposed household payments including mortgage (principal plus interest), heat taxes, and strata maintenance fees must not exceed 32% of gross verifiable monthly income, and total debt servicing must not exceed 42%.

To calculate debt servicing, take your gross monthly income, if salaried, or an average of 3 years of net income, if self-employed, and multiply by 0.32 (or 32%) = A.

Add the monthly mortgage payment calculated for the purchase price of the property to the monthly heating cost, plus half of the strata fees (if strata), plus property taxes (calculated monthly). This must not exceed A.

If the total payments are under 32% of the monthly income, you may qualify.

• Verification of income in the form of a letter from employer is required if salaried or, if self-employed, 3 years income tax returns plus financial statements (if applicable).  Recently employed borrowers on probation or short-term contracts are not normally considered.

• Where the minimum down payment is being met by way of a financial gift, these funds must be in the possession of the borrower 15 days prior to the completion of the sale.

 

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