For most people, the hardest part of buying a home - especially a first home - is saving the necessary down payment. If you have less than 20% of the purchase price to put down, you will be required to purchase mortgage insurance through your lender. However you need to prove sufficient income proof.  Mortgage insurance protects your lender against payment default.

By providing Mortgage Loan Insurance to lenders, Canada Mortgage & Housing Corp (in short CMHC) enables you to finance up to 95% of the purchase price of a home. This means you can buy a property with as little as 5% down. So if the cost is $125,000, you would need a down payment of just $6,250! CMHC Mortgage Loan Insurance has made home ownership possible for millions of Canadians.

CMHC Guildlines are different for self employed individuals.

  
       
   
       
 
 
   
       
 
Once the following conditions are satisfied, you are eligible for CMHC Mortgage Loan Insurance:
    
       
 
The home which is to be occupied as your principal residence is located in Canada.
 
You have a down payment of at least 5% of the purchase price of the property (7.5% for two-unit properties). See Just 5% Down.  
 
Your home-related expenses do not exceed 32% of your gross household income.
 
Your total monthly debt load does not exceed 40% of your gross monthly household income.   
 
You are able to pay closing costs equivalent to at least 1.5% of the purchase price.
   
       
 
 
   
       
  Yes, you can buy a home with a down payment of less than 10%:    
       
 
  Single-family dwelling: 5%
   
       
 
  Two-unit dwelling: 7.5%
   
       
 

Minimum equity of 5% from your own resources is required. Gift down payments from an immediate relative are acceptable.

Reprinted from CMHC - Canada Mortgage and Housing Corporation - source:
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm

 

    
 

Loan-to-Value

Premium on Total Loan

Premium on Increase to Loan Amount for Portability and Refinance

Standard Premium

Self-Employed without 3rd Party Income Validation

Standard Premium

Self-Employed without 3rd Party Income Validation**

Up to and including 65%

0.60%

0.90%

0.60%

1.75%

Up to and including 75%

0.75%

1.15%

2.60%

3.00%

Up to and including 80%

1.25%

1.90%

3.15%

4.45%

Up to and including 85%

1.80%

3.35%

4.00%*

6.35%*

Up to and including 90%

2.40%

5.45%

4.90%*

8.05%*

Up to and including 95%

3.15%

N/A

4.90%*

N/A

90.01% to 95% —
Non-Traditional Down Payment***

3.35%

N/A

*

N/A

Extended Amortization Surcharges
Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period (for LTV ≤ 80%).