CMHC insurance and Down payment Calculation

[Nir]

Hello everyone!
when there is CMHC insurance I understand the amount is added to the mortgage, say 2.75% is added for insurance due to 5% downpayment.
My question is related ot the downpayment amount in this example: is it 5% of the purchase price or 5% of (purchase price + CMHC insurance)? not usre how the bank calculates that. THANKS

 

[GarthChapman]

The downpayment is calculated as 5% of the LOWER OF the purchase price or the appraised value. Then the insurance fee is added to the mortgage, unless of course you want to pay it up front.
Hope that helps,

 

[Nir]

Garth, thank you for the clear answer. that`s exactly what I needed for a report I`m preparing for a meeting in the bank. Regards.

 

[RobMacdonald]

Hi,

Garth is exactly right, the downpayment is still collected by the lawyer upon closing. The premium is usually added to the principle and then amortized over the length of the mortgage.