Is it a bad idea to get CMHC mortgage insurance when buying a house?

Question

My friend is planning to buy a house in Ontario. He's pretty young, in his 20s and he might buy another house when he starts a family. He asked me if its a bad idea to get CMHC mortgage insurance when buying a house? Does it put a black mark on his credit record and effects him when buying another house later on? Also I heard, starting October everyone in Canada has to put a 20% when buying a house. Is this true?

Answer 1

No, you don't have to put 20% down.   But if you don't you need mortgage insurance - either from CMHC or another company to borrow from any major lender in Canada.  There is a sliding percentage, highest with 5% down and reducing to nothing at 20% down.  This is not a matter of his choice he is unlikely to get a mortgage without it.  

It has nothing to do with his credit or subsequent housing purchases.  What happens in October is that CMHC will no long insure 40 year mortgages or ones with less than 5% down.  The other mortgage insurers have followed suit and some major banks have already implemented the policy.

Answer 2

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