Saving the downpayment is often the most challenging part of purchasing a home. Canada Mortgage and Housing Corporation (CMHC) and Genworth Canada each offer mortgage loan insurance to lenders so that qualified home buyers can realize their dream of homeownership with only 5% downpayment. Each of these insurers now offer incentives for homes that are energy efficient.
Canada Mortgage and Housing Corporation has “added environmentally friendly features to the Mortgage Loan Insurance it offers. If you use CMHC insured financing to buy an energy-efficient home, purchase a house and make energy-saving renovations or renovate your existing home to make it more energy-efficient, a 10% refund on the Mortgage Loan Insurance premium, and a premium refund for a longer amortization period (if applicable) may be available.”
Similarly, Genworth offers “a 10% refund of the Genworth mortgage insurance premium, access to Genworth’s Homebuyer Privileges™, an exclusive on-line discount program for commonly purchased household items, enhanced qualifying: Debt Servicing Ratios can be calculated using the estimated reduced heating costs as per the energy efficiency evaluation report” and states that the discount is available on all of their Mortgage Insurance products.
What does this mean to you, the buyer? Here’s an example:
|Downpayment of 5%||$12,500.00|
|Standard Mortgage Insurance Premium on 95% LTV is 2.75%||$6,531.25|
|Energy-Efficiency Premium Refund of 10%||$653.13|
|Total Premium Payable after discount||$5,878.13|
The above example does not include any applicable provincial sales tax.
Each of these two insurers have criteria for qualifying programs under which the qualifying house must be built, or the houses must have an Energuide rating of at least 82 for any purchase closing after January 1st, 2013. They will also consider homes which have been renovated to make them more energy-efficient.
Whichever insurer you choose, making your home more energy efficient has an added financial benefit with these programs, in addition to the money you’ll save in energy costs. For more information on CMHC’s energy efficiency program, please click here. For more information on Genworth’s energy efficiency program, please click here.