February ~, Mr. Gary Reardon, President, Canadian Home Builders' Association, 200 Elgin Street, Suite 502, Ottawa, ontario.

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1 CMHc Helping to house Canadians Office of the President schl Question habitation, comptez sur nous Bureau du President February ~, 1992 Mr. Gary Reardon, President, Canadian Home Builders' Association, 2 Elgin Street, Suite 52, Ottawa, ontario. K2P 1L5 Dear Mr. Reardon: The Honourable Elmer MacKay, Minister responsible for Canada Mortgage and Housing Corporation, has just announced today a new mortgage loan insurance product for first time homebuyers. Offered under the National Housing Act this measure will be in effect for a two year period. It will be reviewed after that time. It will stimulate the economy and improve access to homeownership. Price ceilings have been established which will be reviewed regularly. Details are outlined in the enclosed material. If your Association has any questions, Mr. Guy Gagne, Director of CMHC's Underwriting Division, will be pleased to answer them. Mr. Gagne can be reached at (613) Yours sincerely, Enclosures E.A. Flichel, President. Canada Mortgage and Housing Corporation Societe canadienne d'hypotheques et de logement Ottawa, Canada K1A OP7

2 Fact Sheet FIRST HOME LOAN INSURANCE Availability This is a two year initiative and will be subject to review at the end of this period. Eligible Borrowers Anyone who: buys a home in Canada intending to occupy it as his/her principal residence, and; has not owned his/her principal residence at any time during the last five years. Where there is more than one co-buyer, only one has to be a first-time buyer as defined above. Income and Payments Buyers using Loan I nsu ranee may consume up to 35% of their gross family income for payments of principal, interest, property taxes ( P. I. T.) and heating. A buyer's total debt load cannot exceed 42% of gross family income. Regular CMHC insurance caps P. I. T. and heating payments at 32% of family income and total debt load at 42% of family income. Premiums Loan I nsu ranee premiums on loans above 9% of the lending value of the house will be 2.5% of the mortgage loan or 3% if there are multiple advances. This premium can be added to the mortgage. Premiums for CMHC insurance on loans of 9% or less range from. 5% to 3% of the mortgage loan. Premiums are calculated on the basis of the risk CMHC faces when insuring different types of mortgage loans. Loan Amounts Maximum mortgage loan is 95% of the lending value of the house. Mortgage Term Minimum mortgage term is 5 years. Maximum House Prices In greater Toronto and Vancouver areas : $25,. In sixteen other centers with high average house prices as well as northern areas (see list on reverse): $175,. Everywhere else : $125,. Accessibility It is easy to show how the First Home Loan I nsu ranee down payment of 5% makes homeownersh ip more accessible by comparing it to regular CMHC loan insurance. The maximum mortgage loan under regular insurance is 9% of the first $18, of lending value of the house plus 8% of the balance. The minimum downpayment is 1%. NIIA 655 CMHC tj SCHL Hel in to house Canadian Canada

3 FIRST HOME LOAN INSURANCE EXAMPLES: TORONTO AND VANCOUVER AREAS Price ceiling: Down payment: $25, $25, $ 12,5 $237,5 $25, $ 32, $218, * * Calculated as follows: 9% of the first $18, of the house price and 8% of the balance. 9% $162, + $ 8% $ 56, = Mortgage $218, OTHER CENTERS AND NORTHERN AREAS Price Ceiling Down payment: $175, $175, $ 8,75 $166,25 $175, $ 17,5 $157,5 Eligible Census Metropolitan Areas (s] and Census Agglomerations (s) Barrie, Ont. Calgary, Alta. Edmonton, Alta. Hamilton, Ont. Kingston, Ont. Kitchener, Ont. London, Ont. Montreal, Que. North Bay, Ont. Oshawa, Ont. Ottawa, Ont. Peterborough, Ont. St. Catharines, Ont. Sudbury, Ont. Victoria, B.C. Windsor, Ont. plus the Yukon, Northwest Territories, Northern Quebec and Labrabor REST OF NADA Price Ceiling Downpayment (5%): $125, $125, $ 6,25 $118,75 $125, $ 12,5 $112,5 For complete information, please contact the CMHC office closest to you.

4 E ASE MINISTER RESPONSIBLE FOR NADA MORTGAGE AND HOUSING CORPORATI ON FOR IMMEDIATE RELEASE CMHC REDUCES INSURED MORTGAGE DOWNPAYHENTS TO FIVE PER CENT WINNIPEG - February 3, 1992 For the next two years, five per cent downpayments on federally-insured mortgages will be available for first-time homebuyers, Elmer MacKay, Minister responsible for Canada Mortgage and Housing Corporation (CHHC), announced today. CHHC's Loan Insurance will reduce the current minimum ten per cent downpayment requirement for federally-insured mortgages to five per cent for first-time homebuyers. The plan will be in effect immediately for the next two years, at which time it will be reviewed. "This initiative will help strengthen Canada's housing industry and during the next two years could help make homeownership accessible to some 2, Canadian households currently renting," Hr. MacKay said. "Five per cent downpayments are intended for people who can afford the monthly mortgage payments but have difficulty saving the minimum 1 per cent," added Hr. MacKay..... /2 NHA 5998 CMHC~SCHL Helping to house Canadians

5 Homes eligible for financing under this initiative are subject to price ceilings. In the greater Toronto and Vancouver areas, the maximum price is $25,. In centers with relatively higher average house prices and in northern areas, the ceiling is $175,. A price ceiling of $125, applies everywhere else in Canada. CMHC ~ortgage loan insurance protects approved mortgage lenders against loss if the borrower is unable to make the mortgage payments. In return, CMHC receives a premium of up to 2.5 per cent of the mortgage. The premium for Loan Insurance is the same as that applied to mortgages with a 1 per cent downpayment. Ten per cent downpayment mortgage insurance will continue to be available for all other potential homebuyers. In 1991, CMHC heiped more than 134, Canadian households access homeowner ship by providing insured home financing. CMHC mortgage loan insurance is available through most major banks, trust companies and other mortgage lenders across Canada. Further information: Michelle Whelan Minister's Office (613) Guy Gagne CMHC (613)