Mertyl is interested in buying a house worth $335 000 and has a down payment of $40 000. What will be the CMHC insurance premium? CMHC charges the following rates: Up to and including 80 percent, 1.00 percent; up to 85 percent, 1.75 percent; up to 90 percent, 2.00 percent; up to 95 percent 2.75 percent.

Question

Quizplus · Accepted Answer

The correct answer is A because the down payment is $40,000, which is 11.94% of the house value ($40,000/$335,000 = 0.1194). Since the down payment is less than 20%, the CMHC insurance premium will be 1.00% of the loan amount. The loan amount is $335,000 - $40,000 = $295,000. Therefore, the CMHC insurance premium will be $295,000 x 1.00% = $2,950.

Mertyl Is Interested in Buying a House Worth $335 000