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Frequently heard on “Experts on Call”

95% First Mortgages

All purchasers of owner occupied homes qualify for 95% first mortgages. You DO NOT have to be a first time homebuyer. Many people think they do but you don't. If you qualify for the mortgage you'll be approved. To qualify you must meet the following guidelines.

The purchase price cannot exceed $300,000.00. The home must be your principal residence. You must be a Canadian citizen. Your down payment must be from your savings or be gifted by a blood relative. Go to Question # 6 for more information.

To qualify for this mortgage your Gross Debt Servicing (GDS) must not exceed 32% of your income. This is calculated by taking the monthly principal, interest and property tax payment plus $50.00 for heat and ½ of your condominium fee. You multiply this payment by 12 months and divide the total by your gross yearly income(s). The percentage must be 32% or less. You can calculate some mortgage payments on our calculator.

Once you have this payment you add all your other monthly payments like a car payment, VISA or any other credit card payment. Do not add in cable or any small amounts. Lenders are looking for mostly loans, lease or any other debt payments. You add this to the total above mortgage payment and divide it by your gross yearly income. The total cannot be more than 40%.

These 95% mortgages are insured by one of two companies. Canada Mortgage & Housing Corporation (CMHC), or G.E. Capital. The insurance premium is 3.75% of the amount of the mortgage you are approved for. The insurance premium is added to the face amount of your mortgage. For example if you purchase a home for $150,000.00 and you were approved for a 95% mortgage, your mortgage amount would be $142,500.00. The mortgage insurance would be $5,272.50, (3.75% x $142,500.00). Your mortgage balance would now be $147,772.50 and this is the amount that your payments are calculated on and what you must qualify for. The insurance premium is NOT life insurance — it is default insurance for the lender in case of non-payment.