Jennifer is purchasing a new condominium for $400,000 with a 5% down payment. Her gross annual income is $60,000. Property taxes are $1,800/year, and estimated heating costs are $600/year. Assuming a qualifying rate of 5.25% compounded semi-annually and a 25-year amortization, which of the following statements about CMHC insurance eligibility is most accurate?

Question: Jennifer is purchasing a new condominium for $400,000 with a 5% down payment. Her gross annual income is $60,000. Property taxes are $1,800/year, and estimated heating costs are $600/year. Assuming a qualifying rate of 5.25% compounded semi-annually and a 25-year amortization, which of the following statements about CMHC insurance eligibility is most accurate?

Answer options:

• The mortgage will be eligible for CMHC insurance because the purchase price is below $1,000,000 and the LTV is 95%.
• The mortgage will be ineligible for CMHC insurance due to the low down payment amount. ✅ The mortgage will be eligible only if her GDS and TDS ratios meet CMHC maximums (39% and 44% respectively).
• CMHC will not insure mortgages on condominiums, only detached homes.

Correct answer: The mortgage will be eligible only if her GDS and TDS ratios meet CMHC maximums (39% and 44% respectively).

Explanation: While the down payment and purchase price meet general CMHC criteria (5% down for properties under $1M, and condo eligibility), the ultimate eligibility hinges on the borrower meeting CMHC's standard debt service ratios (currently 39% GDS and 44% TDS) calculated at the stress test rate.