CMHC (Canada Mortgage and Housing Corporation)
Quick Definition
Federal Crown corporation that provides mortgage default insurance for high-ratio mortgages.
Full Explanation
The Canada Mortgage and Housing Corporation (CMHC) is a federal Crown corporation that provides mortgage loan insurance (commonly called CMHC insurance or mortgage default insurance) to protect lenders against mortgage defaults. CMHC insurance is mandatory in Canada when the down payment is less than 20% of the purchase price. The premium ranges from 0.60% to 4.00% of the mortgage amount, depending on the loan-to-value ratio. It is added to your mortgage balance. CMHC insurance enables Canadians to buy homes with as little as 5% down payment.
Related Terms
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
Down Payment
The upfront cash you pay toward a home purchase, expressed as a percentage of purchase price.
Loan-to-Value Ratio (LTV)
The percentage of a property's value financed by a mortgage.
Mortgage Stress Test
A Canadian requirement to qualify for a mortgage at a higher rate than the contract rate.
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