Our portability feature saves money for repeat users of mortgage loan insurance by reducing or eliminating the premium payable on the new insured loan for the purchase of a subsequent home.

You can explore two cost effective options with your clients: straight portability, where no additional premium is required or portability-with-increase, where additional premium is required however, premium credits may be available.

Download our one page CMHC Portability program fact sheet (PDF).

FEATURES

  • Available for all CMHC-insured mortgage loans covering residential properties originally insured by CMHC through emili on or after April 1st, 1996.
  • Borrower(s) on the new loan must be the same as those on the original CMHC-insured loan.
  • The premium is the lesser of Premium on Increase to Loan Amount or the Premium on Total Loan Amount. Where new Premium on Total Loan Amount is paid, a premium credit may be available.
  • Maximum one CMHC-insured property per borrower/co-borrower at any given time.
  • The property must be located in Canada, be suitable and available for full time / year round occupancy and have year round access including homes located on an island (via a vehicular bridge or ferry).

* Current LTV on existing property: (outstanding balance ÷ original purchase price)

straight portability

For straight portability, the following three criteria must be met:

  • The amortization period of the new loan cannot exceed the amortization remaining from the original loan (up to a maximum of 25 years).
  • The new loan-to-value (LTV) is equal to or less than the current LTV of existing property.
  • The new loan amount is equal to or less than the current outstanding balance.

Example

A property was purchased 3 years ago for $200,000 at 90% LTV. The current outstanding balance is $172,000.

    • The new property purchase price is $210,000
    • A new mortgage is sought for $172,000 and the amortization will be maintained at 22 years

What is the premium to be charged?

Facts:

  • Outstanding balance = $172,000. New loan $172,000. This means no new money
  • Current property LTV (original purchase price) = $172,000 / $200,000 = 86%
  • New property LTV= $172,000 / $210,000 = 82% & therefore LTV has decreased

Since there is no new money, no increase in LTV or increase in amortization, there is no premium to be charged.  This qualifies as a straight port.

portability with increase to loan amount

For portability with increase to loan amount, the following criteria must be met:

  • The maximum amortization will be the greater of the remaining amortization from original loan (up to a maximum of 25 years) or blended amortization (a blended amortization period is subject to a 0.60% surcharge which is applied to the Increase to Loan Amount)**.
  • For homeowner loans, a conversion surcharge of 0.3% is applied to the outstanding balance (as at the time of the request to use the Portability feature) if the loan insurance application is “converted” from a traditional down payment application to a non-traditional down payment application.
  • The maximum new loan-to-value (LTV) is 90% (CMHC may consider a higher LTV ratio, up to 95%, when the new LTV ratio is equal to or less than the original LTV ratio (at time of original purchase)).

Example

A property was purchased 5 years ago for $200,000 at 90% LTV with a 25 year amortization.

    • The outstanding balance is $162,000
    • The property was just sold and a new one will be purchased for $300,000 at 90% LTV but the amortization will be maintained.

What is the premium to be charged?

Facts:

  • Outstanding balance = $162,000. New loan $270,000, which means $108,000 new money
  • Current property LTV:  $162,000 / $200,000 = 81%
  • New property LTV= $270,000 / $300,000 = 90%. LTV slightly increased
  • Amortization remains in line

This means $108,000 (new money) X 6.25% (premium for LTV of 90%) = $6,750
or
$270,000 (entire loan amount) X 3.10% = $8,370

The first option is less expensive

** Blended amortization: [(outstanding balance x Remaining Amortization) + (New funds x up to 25  years)]/Total Loan Amount

portability with increase to loan-to-value (with no increase in loan amount)

For portability with increase to loan-to-value, the following four criteria must be met:

  • The maximum amortization will be the remaining amortization from original loan (up to a maximum of 25 years)
  • The new loan amount is equal to or less that the outstanding balance.
  • The new LTV on subsequent property is greater than the current loan-to-value (LTV) on existing property
  • The maximum new LTV for the subsequent property is 90% (CMHC may consider a higher LTV ratio, up to 95%, when the new LTV ratio is equal to or less than the original LTV ratio (at time of original purchase)).

A property was purchased 3 years ago for $300,000 at 85% LTV.

    • The outstanding balance is $240,000 with a 22 year amortization remaining
    • The property was just sold and a new property will be bought with a purchase price of $240,000, a LTV of 90% (Ie: loan of $216,000) and will maintain the remaining amortization

Facts:

  • Outstanding balance = $240,000 & New loan = $216,000. No new money
  • Current property LTV= $240,000/$300,000 = 80%
  • New property LTV= $216,000 /$240,000 = 90%, which means an increase in LTV
  • Amortization remains in line; no increase

Given the increase in LTV, the risk has changed and there will be a premium charged.

What is the premium to be charged?

Step 1. Calculate the difference in LTV: 90% - 80% = 10% increase in LTV

Step 2. Increase in LTV multiplied by the purchase price of the property: 10% X $240,000 = $24,000

Step 3. Take the above value and multiply it by the new LTV premium top-up factor: $24,000 X 6.25% = $1,500.00 is the premium due.

portability premium credit

The Portability feature may allow for a Premium Credit to reduce the premium payable on a new loan insurance application. The Premium Credit is based on the elapsed time (up to a maximum of 24 months) from the original closing date of the existing CMHC-insured loan to the application received date for the new CMHC-insured loan request.

Full amortization of 25 years is available.

Example

A property was purchased 8 months ago for $200,000 at 90% LTV. The current outstanding balance is $182,000.

    • The new property purchase price is $225,000
    • A new mortgage is sought for $210,000 and requires an amortization of 25 years

What is the premium to be charged?

Facts:

  • Amortization needs to be extended to 25 years. No top-up option is available
  • New property LTV= $210,000 /$225,000 = 93%; LTV>90%. No top-up option is available.
  • Previous purchase within 2 years of new purchase= Port credit!

Step 1. Calculate full premium for new loan: $210,000 x 4% = $8,400

Step 2. Premium paid 8 months ago was $5,580

Step 3. Premium was paid within 1 year (and longer than 6 months ago); therefore 50% of $5,580 ($2,790) will be credited toward the new premium:  $8,400 - $2,790 = $5,610 is the premium due

ELIGIBILITY REQUIREMENTS APPLICABLE TO ALL PROGRAMS

Eligible borrowers

Individuals who are Canadian citizens, permanent residents of Canada, or non-permanent residents who are legally authorized to work in Canada.

Loan-to-value (LTV) ratios

For homeowner loans (owner-occupied properties), the loan-to-value ratio for 1 – 2 units is up to 95% LTV. For 3 – 4 units, the ratio is up to 90% LTV.

For small rental loans (non-owner occupied), the loan-to-value ratio for 2 – 4 units is up to 80% LTV.

Minimum equity requirements

For homeowner loans, the minimum equity requirement for 1 – 2 units is 5% of the first $500,000 of lending value and 10% of the remainder of the lending value. For 3 – 4 units, the minimum equity requirement is 10%.

For small rental loans, the minimum equity requirement is 20%.

Purchase price / lending value, amortization and location

For both homeowner and small rental loans, the maximum purchase price / lending value or as-improved property value must be below $1,000,000.

For homeowner loans, CMHC-insured financing is available for one property per borrower/co-borrower at any given time.

The maximum amortization period is 25 years.

The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. The property must also have year-round access (via a vehicular bridge or ferry if it is on an island).

Traditional and non-traditional down payments

A traditional down payment comes from sources such as savings, the sale of a property, or a non-repayable financial gift from a relative.

A non-traditional down payment must be arm’s length and not tied to the purchase and sale of the property, either directly or indirectly, such as unsecured personal loans or unsecured lines of credit. Non-traditional down payments are available for 1 – 2 units, with 90.01% to 95% LTV, with a recommended minimum credit score of 650.

Rental income

Whether the property is owner occupied or non-owner occupied, subject to an MLI application or not, we offer different approaches to rental income for qualification purposes.

Find out more about the approach(es) that can be used to calculate rental income and the inputs to consider when calculating the debt service ratios.

Creditworthiness

At least one borrower (or guarantor) must have a minimum credit score of 600. In certain circumstances, a higher recommended minimum credit score may be required. CMHC may consider alternative methods of establishing creditworthiness for borrowers without a credit history.

Debt service guidelines

The standard threshold is a gross debt service (GDS) ratio of 35% and a total debt service (TDS) ratio of 42%. The maximum threshold is a GDS ratio of 39% and a TDS ratio of 44% (recommended minimum credit score of 680). CMHC considers the strength of the overall mortgage loan insurance application, including the recommended minimum credit scores.

Interest rates

The GDS and TDS ratios must be calculated using an interest rate that is either the contract interest rate or the Bank of Canada’s 5-year conventional mortgage interest rate, whichever is greater.

Advancing options

Single advances include improvement costs less than or equal to 10% of the as-improved value.

Progress advances include new construction financing or improvement costs greater than 10% of the as-improved value. With Full Service, CMHC validates up to 4 consecutive advances at no cost. For Basic Service, the Lender validates advances without pre-approval from CMHC.

Non-permanent residents (homeowner loans only)

Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is only available for non-permanent residents for homeowner loans for 1 unit, up to 90% LTV, with a down payment from traditional sources.

Non-permanent residents are not eligible for alternative methods of establishing creditworthiness. In cases where a credit report is not available, a letter of reference from the borrower’s financial institution in their country of origin may be considered.

PREMIUM INFORMATION

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Disclaimer

This material is a quick reference tool for CMHC’s common Mortgage Loan Insurance. Additional conditions may apply.

This information is subject to change at any time. Please verify with CMHC that you have the most up to date information before the loan is processed.

Date Published:: November 9, 2018