Get 0 Down Mortgage & 40-Year Amortization While You Can

Starting Oct. 15, 2008 Canadians will no longer be able to purchase a home with a government-backed mortgage with a 40-year amortization and no down payment. The Finance Department said Wednesday it will no longer guarantee 40-year mortgages and will require a minimum down payment of five per cent of the value of a home. Mortgages will be limited to 35 years and the government will only insure 95 per cent of the value of the home, meaning buyers will need to come up with at least a five per cent down payment.

Mortgage insurance protects lenders when a borrower defaults by making up any shortfall needed to repay the loan if the sale of the property doesn't cover the debt. Federally regulated lenders (All major banks, credit unions, and mortgage companies) must have mortgage insurance on loans where the buyer's down payment is less than 20 per cent of the price. Canadian Government backs the insurance whether it is provided through the Canada Mortgage and Housing Corp. or private insurers, such as Genworth Financial.

New rules will also establish a requirement for a consistent minimum credit score and introduce new loan-documentation standards.

Homeowners who already hold mortgages won't be affected by the changes.

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