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What is CMHC? What do they do, and do I have to use them?
July 16, 2019
11:53 am
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I'm looking at buying my first home.  I heard that there are CMHC fees that I have to pay. 

 

What is CMHC and how can I avoid using them, or paying their fees?

July 19, 2019
12:36 pm
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CMHC stands for Canada Mortgage and Housing Corporation.  It is involved in every house purchase in Canada where the buyer has less than 20% down payment.  (15% with most Credit Unions)

Think of CMHC as an insurance company FOR THE BANKS.   If a buyer, who only puts down 5% on a house or condo purchase, defaults on his mortgage payment, the bank might have to take the house and sell it to recoup their investment.  With only 5% down, the margins are too tight, and the bank might lose money.

So CHMC 'insures' the mortgage, and pays the bank whenever the current owner defaults.

Of course, there are fees involved, and the buyer has to pay them.  These fees are tacked onto the mortgage.

Also, while this type of insurance is mandatory for all home buyers with less than the 20% down, there are competitors to C.M.H.C., such as Genworth, and Canada Mortgage.....   both operating under the similar principles as CMHC.

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