CMHC's 5% DOWNPAYMENT PROGRAM was originally for first-time homeowners, but was expanded in May 1998 and is now available to all purchasers (principal residence only) who meet the normal requirements.
Under this program, CMHC sets maximum purchase prices depending on location. In Toronto, Calgary, Vancouver and Victoria the purchase limit is $250,000. In other areas where average house prices tend to be high, and in northern areas, the maximum is $175,000. Everywhere else the maximum is $125,000.
Check with your mortgage broker to learn what the price limits are in your area.
If the property is a duplex (and you are buying both sides), with one side being owner occupied, the minimum downpayment is 7.5%.
Mortgage brokers and lenders must verify that the borrower has the 5% downpayment and 1.5% of the purchase price to cover closing costs. The only exception to the 1.5% is when the purchaser qualifies for an exemption of the Land Transfer Tax (Ont.) or Property Transfer Tax (B.C.), or similar provincial tax exemption. In these cases the mortgage broker or lender must ensure that there are sufficient funds available to cover all remaining closing costs. It is also possible to finance the closing costs over 12 months as long as the payments fit inside the 40% TDS ratio.
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