CMHC’s Groundbreaking Rental Program

CMHC If you’re an income property investor (i.e. landlord) you might just fall in love with the new CMHC rental program.

In essence, it lets you buy an “unlimited” number of 1-2 unit rentals with $0 down…if you qualify.

The Financial Post says:

“None of CMHC’s competitors are coming close to this new [100% financing] offer.”

Canada’s #2 and #3 insurers, Genworth Financial and AIG, each require investors to put down 10%.

With nothing down, you can build your rental empire all that much faster. However, because the risk is so high, so is the mortgage default insurance fee of 7.25% (for a 25-year amortization).

Of course, if you put down more than 0% this fee drops.  It might also be tax deductible.

CIBC economist Benjamin Tal expects more out-of-the-box mortgage solutions in coming months. “The genie is out of the bottle, this mortgage market is starting to move. Over the past 16 months we’ve seen more changes than the past 30 years.”

As popular as it may be, there are very few lenders offering the new CMHC rental program.  Moreover, the approval standards are relatively high.   Feel free to contact us or your favorite mortgage planner for details.

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Sidebar:  Stephen Dupuis, CEO of the Building Industry and Land Development Association, says that CMHC’s “logic escapes” him.  Dupuis is worried that programs like these will overheat Canada’s already sizzling real estate market. 

It’s a valid concern but the mortgage insurance market has never been more competitive.  If CMHC didn’t offer this product, one of the other 2 (soon to be 4) insurers probably would have.

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