CMHC Mortgage Insurance Rebate Programs

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price (Jordan and I are putting 5% down which means our insurance premium will be at least 2.75%). Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5%.

To obtain mortgage loan insurance, lenders pay an insurance premium. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments (Jordan and I will be adding it to our mortgage).

My mom was doing some interneting and learned that there are rebates available for mortgage loan insurance (through the Canada Mortgage and Housing Corporation - CMHC)  if home meets certain energy efficient standards.

Jessie Goes: "...oohhh rebate? free monies?..."

So...research has commenced.

Homes built under qualifying programs qualify for a 10 per cent premium refund and extended amortization periods without a premium surcharge (if we go with a 30 year instead of 25 year amortization the surcharge is 0.20%) when CMHC Mortgage Loan Insurance is used to finance their purchase or construction.

There are a number of programs available both on the builder/buyer/renovated side of things - all with the goal of achieving a highly energy efficient home.  There are three programs available where we live in Canada (two are national, one is for Alberta).  If you click the link you'll find that the National programs include the R-2000 and the Leed program as well as the Build Green program (Alberta Only) which are essentially builder sponsored and require the builder to issue a Building Certificate which CMHC uses to validate the energy efficiency of the home. 

As our builder is not involved with these programs, we will explore an alternative option.

Natural Resources Canada has a rating scale called the EnerGuide.

An EnerGuide rating shows a standard measure of a home's energy performance. It shows you (and future buyers - think re-sale) exactly how energy efficient your home is.  The rating is calculated based on standard operation assumptions so that you can compare the energy performance of one house against another.

The home's energy efficiency level is rated on a scale of 0 to 100. A rating of 0 represents a home with major air leakage, no insulation and extremely high energy consumption. A rating of 100 represents a house that is airtight, well insulated, sufficiently ventilated and requires no purchased energy on an annual basis.

Okay - so we've learned that through Natural Resources Canada (NRC) you can your home rated and find out if your new home is energy efficient or not.

Then What? Through NRC you can get a qualified assessor in your region to give your home a rating.  I have also found a builder's checklist for reaching a high EnerGuide rating on this website (which I'll be passing along to our builder).

I have contacted several of these assessors (because I was putting out 'feelers' to see what was what and who the best fit would be).  I've found out that most of these folks do a two part assessment.  They first do an assessment of the building plans and standards and can recommend upgrades (that you would get your builder) that will get you to the minimum rating of 80 in order to successfully apply to the CMHC for your rebate.  

The assessor would then assess the actual home once it was built and assign the home it's rating.

So, how do we get the rebate?

Once you have your EnerGuide rating and have lined up your financing and mortgaged your new home you have to apply through the CMHC either online or by mailing a completed application. 

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So that seems like a huge process - but really it's not.  We hire a qualified person to do an assessment on our building plans, make on a decision on potential upgrades (like windows and insulation).  Once the house is built we have an home assessment done and then apply for our rebate.

I've heard from a couple of assessors and they charge about $500 to complete the assessments - so now we get to the really fun part, how much will Jordan and I save?

So if we spent approximately $500 now we could receive a rebate of $1,600 and then apply that directly to the mortgage, which would save us 30 years of interest on that $1,600.  Which according to this calculator, would save us $1,523.44 in interest alone - so nearly $3,000 over the life of the mortgage. Wow, that is significant, and doesn't even account for long term decrease in utility expenses.

So, here's my thinking:  If the upgrades recommended to get the home to an EnerGuide rating of 80 or above costs less than $2,500 - that plus the $500 initial assessment investment would be worth it.

If you lasted this long, I would love to know what your thoughts are.

...phew...that just might win longest post of the year award, if such a thing existed.