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Down Payment IssueGood housing is fundamental to the Canadian quality of life. Its essential to our economy as well. The housing industry directly or indirectly employs one in five Canadians. No other single industry in Canada has such a large impact on our economy. Canada Mortgage and Housing Corp (CMHC) and Genworth Financial Corporation (Genworth) play an important role in Canada's housing industry. CMHC is a Crown Corporation and the administrator of the National Housing Act for the federal goverment, CMHC designs programs to help Canadians in need get adequate housing. Genworth is a privately owned firm that offers the same insurance serve as CMHC. Mortgage Loan Insurance: Under the provisions of the National Housing Act, lending institutions cannot provide first mortgage financing in excess of 75% of the purchase price/appraised value of a home unless the mortgage is insured. Lenders feel confident about making loans for up to 100% of the value of the property when borrowers qualify for and purchase mortgage loan insurance. An insurer of mortgage loans, such as CMHC or Genworth, reduces the lender's risk of lending money to homebuyers. What if I dont have a large downpayment? There are many programs that allow 100% mortgage and no downpayment. Your rate will be slightly higher but you will own your own home sooner. With as little as 5% for a downpayment, lenders will offer you their best-discounted rates. While your downpayment can be as low as 0%, keep in mind that the larger the downpayment, the less your home will cost over the long term--so it makes sense to put down as much as you comfortably can. Putting more down, keeps your costs down. For our example, we've assumed the following: House Price: $200,000 Mortgage Rate: 6.00% Principal and Interest payment: 6.398 per $1,000 (25yr Amortization)
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