Buying a New Home

Purchasing a home requires a down payment, or the money put towards the price of your home. The size or percentage of the down payment made determines whether you have a conventional mortgage or a high ratio mortgage.

Saving up for your first down payment is probably your biggest challenge. Conventional mortgages require a minimum of 25% down on the appraised value or purchase price of the home. If you are unable to make a 25% down payment, you can get a high ratio mortgage - which is usually greater than 75% of the appraised value. A high ratio mortgage must be insured against default by the federal government through the Canada Mortgage and Housing Corporation (CMHC) or an approved private insurer. The CMHC program or fee is a type of Mortgage Loan Insurance. It is a one-time insurance premium the borrower must pay to the insurer, generally ranging from 0.5% - 3.75% depending on the size of the loan and the value of the house. The premium is usually added to the principal amount of the mortgage.

Once you have figured out how much down payment you can afford, you must consider payment options. Mortgages are based on a variety of set terms that you can negotiate with Canada Mortgage Refinance Rates.

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