What is the minimum down payment required for a CMHC-insured mortgage on a home priced at $400,000 in Alberta?
Correct Answer
D) 5% ($20,000)
For a home priced at $500,000 or less, the federal minimum down payment is 5% of the price. On a $400,000 home that is 5% x $400,000 = $20,000. Because this is less than 20%, the mortgage must carry mortgage default insurance, for example from CMHC.
Why This Is the Correct Answer
The whole $400,000 price falls in the tier where 5% applies, so the minimum down payment is $20,000. With less than 20% down, the loan is a high-ratio mortgage and needs default insurance such as CMHC's.
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