1. What is CMHC Premium?

The CMHC (Canada Mortgage and Housing Corporation) premium is a mandatory insurance payment for homebuyers with a down payment of less than 20% of the home's purchase price. It protects lenders against borrower default.

2. How Does the Calculator Work?

The calculator uses the CMHC premium formula:

Where:

• \( Loan \) — Mortgage loan amount (CAD)
• \( Value \) — Property purchase price or value (CAD)
• \( Rate \) — CMHC premium rate based on loan-to-value ratio

Explanation: The premium is calculated as a percentage of the loan amount, with the percentage determined by the size of your down payment.

3. Importance of CMHC Insurance

Details: CMHC insurance allows buyers to purchase homes with down payments as low as 5%. Without it, lenders typically require at least 20% down payment.

4. Using the Calculator

Tips: Enter the mortgage loan amount, property value, and select the appropriate CMHC premium rate based on your loan-to-value ratio.

5. Frequently Asked Questions (FAQ)

Q1: When is CMHC insurance required?
A: CMHC insurance is required when your down payment is less than 20% of the home's purchase price.

Q2: How is the premium paid?
A: The premium is typically added to your mortgage amount and paid over the life of your mortgage.

Q3: Are there ways to reduce the CMHC premium?
A: Yes, by making a larger down payment (which lowers your LTV ratio and qualifies you for a lower premium rate).

Q4: Is CMHC insurance the same as mortgage life insurance?
A: No, CMHC protects the lender if you default, while mortgage life insurance pays off your mortgage if you die.

Q5: Can I get a refund if I pay off my mortgage early?
A: Partial refunds may be available if you pay off your mortgage early through refinancing or property sale.