CMHC Mortgage Loans
      Example #2: Build equity by owning your home sooner

How buying your home sooner may give you the potential to benefit from house value appreciation. With CMHC mortgage loan insurance you’re able to both buy your home sooner and build equity sooner.

Buyer A Buyer B
Ann buys a $164,000 home in 2000 with a 5% down payment of $8,200.

Here her mortgage is insured through CMHC, which required a mortgage insurance premium of $5,842 (based on the Insurance premium in effect in 2000 — 3.75%).

CMHC’s insurance premiums were reduced in 2005.
  • Julie delays buying her home for four years, until 2004, while she saves the 20% down payment in order to avoid incurring a mortgage insurance premium.
  • In those four years, that same average Canadian home appreciates from $164,000 to a value of $227,000.
  • The down payment Julie required to purchase this house in 2004 was $56,750.
    		•

    Conclusion:
  • Ann’s $5,842 — spent in 2000 for her mortgage loan insurance premium — is more than offset by the increase in the appreciated value of her home. Within these four years she benefits from a capital gain of $63,000.
  • Julie does not profit from any increase in appreciated value while she saves this down payment.

    Example based on MLS® average Canadian house prices in 2000 and 2004. MLS® is a registered trademark of the Canadian Real Estate Association.

    Use this simple tool to see how much your home could be worth in the future.

    Use this simple tool to see how long it could take you to save for a 20% downpayment.

    Click here for historical data on MLS® Average Residential Prices in Canada, Provinces and Metropolitan Areas. (1995 – 2004).

    Disclaimer

    The examples on this site are provided for illustrative and estimative purposes only. The data and information on this site is considered reliable at the time presented, however in the housing market, rates, terms and conditions may change daily. Despite our best efforts, CMHC cannot guarantee that the information is accurate or complete or that it is up to date at all times. Although considerable care has been taken in preparing and maintaining the information and materials, they are provided on an "as is" basis without warranty of any kind, express or implied. CMHC assumes no responsibility or liability of any kind and CMHC shall not be liable for any special, indirect or consequential damages in connection to the information provided. This site is not intended to provide financial or other advice and should not be relied upon in that regard. Neither CMHC nor any of its employees, agents, or advisors shall have any liability for the accuracy of the illustrations herein or for any damage caused by or related to the use of any of this information.


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