August 26, 2015 / By: Brendon Abrams

Review of CMHC Financing

Personal Interest, Investors, Real Estate, Accounting, Property Management, Insurance
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Canada Mortgage and Housing Corporation (CMHC) is a crown corporation of the Government of Canada. A review of CMHC shows its mandate is to help Canadians meet their housing needs. This includes providing support for Canadians, objective research, and advice to Canadian industry stakeholders.

Reviewing CMHC's operations, one of its primary functions is providing mortgage loan insurance. This is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. It acts to protect lenders against mortgage default, as well as enable consumers to purchase homes with lower capital requirements.

In addition to single-family homes and condos, CMHC also provides mortgage loan insurance for the construction, purchase, and refinancing of multi-unit residential properties such as apartments. By providing more competitive financing to apartment owners, these savings are able to be passed on to tenants. CMHC may provide up to 85% of the purchase price dependent on a review of the value of the property.

By accessing CMHC mortgage loan insurance, property owners are able to achieve more competitive financing costs than would otherwise be available. This is in part due to the fact that the mortgage loan is then guaranteed by the Government of Canada and thus its credit rating is applicable to the loan. Amortization length is also available up to 40 years, which enhances cash flow.

A review of other uses that are eligible to obtain CMHC financing includes retirement homes, construction financing, and renovations.

A review of concerns from critics of CMHC include those who believe the government, and thus the taxpayers, are assuming too much risk. These parties would prefer to see the government less involved, or removed entirely, from providing mortgage loan insurance and have the private sector only be responsible for providing this insurance. Currently, CMHC's biggest competitor is Genworth Canada.


Mainstreet Equity Corp. is a publicly-traded (TSX: MEQ) residential real estate company in Canada. Mainstreet currently owns and operates properties in Surrey, BC; New Westminster, BC; Abbotsford, BC; Calgary, AB; Cochrane, AB; Lethbridge, AB; Edmonton, AB; Fort Saskatchewan, AB; and Saskatoon, SK.

Mainstreet provides affordable, renovated apartment suites to Canadians, and is committed to creating real value without diluting shareholder interests.