Under CMHC's premium schedule, what premium applies to a homeowner mortgage with a 5% down payment from traditional sources and a standard 25-year amortization?
Correct Answer
A) 4.00% of the loan amount
A 5% down payment means a 95% loan-to-value ratio. CMHC's premium for 90.01% to 95% loan-to-value with a traditional down payment is 4.00% of the total loan. The premium comes from CMHC's schedule; Ontario's TRESA does not regulate mortgage insurance premiums.
Why This Is the Correct Answer
CMHC's premium table lists 4.00% of the total loan for loan-to-value ratios of 90.01% to 95% with a traditional down payment. A 5% down payment is 95% loan-to-value.
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