Banks and other lenders are forbidden from lending more than 80% of the value of a home in Canada. It’s part of the Bank of Canada Act. And it’s a huge reason why Canada didn’t experience nowhere near the decline that was found south of the border. Not all Canadians can afford to put down 20% on a home purchase. This is where CMHC steps in. They tell the bank that they will insure that you will not default on your loan if they lend you more than 80%, up to 95%. This insurance fee is absolutely non-negotiable. You wouldn’t be able to purchase without CMHC providing the insurance – they are there to assist and encourage home purchasing.
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