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Energy Efficient Homes Made More Affordable

OTTAWA, Ontario, July 27, 2005 — The Honourable Joe Fontana, Minister of Labour and Housing announced today several enhancements to mortgage loan insurance, that will promote energy efficiency and improve home affordability for many Canadians.

Canada Mortgage and Housing Corporation's Mortgage Loan Insurance Program for Energy Efficient Programs is based on Natural Resources Canada's EnerGuide for Houses rating system which rates the energy efficiency of houses. The minimum EnerGuide for New Houses rating requirement to qualify has now been reduced to 77 for a three-year pilot period.

This change in rating will make eligible existing energy-efficient building programs such as Built Green Society™ Alberta Gold, NovoclimatMC (Quebec), ENERGY STAR® (Ontario) and Power Smart™ (Manitoba).

"The Government of Canada is committed to offering affordable choices to ensure quality homes that are environmentally-friendly and energy-efficient are a real option for all Canadians," said Minister Fontana. "We are committed to housing strategies that support affordable housing and environmental sustainability."

In addition, CMHC is extending its energy-efficient flexibilities to all types of condominiums, allowing more Canadians to benefit from choosing to purchase an energy-efficient home. Effective July 27, 2005, CMHC has expanded its 10 per cent refund on its Mortgage Loan Insurance premiums for the purchase of Energy Efficient Homes to a broader scope of properties, including condominium units. The average premium saving would be about $350.

CMHC is also eliminating the premium surcharges associated with the longer amortization periods (25 to 35 years) offered under the Energy Efficient Homes policy effective August 12, 2005. These new changes will result in a one-time savings on CMHC's mortgage insurance premium of up to $500 on every $100,000 of the mortgage.

With these enhancements, about 14 per cent of new homes built in Canada could be eligible for the CMHC mortgage loan insurance premium refund.

Canada Mortgage and Housing Corporation (CMHC) is Canada's national housing agency. For over half a century, CMHC has been contributing to improving the living conditions and the well-being of Canadians through four areas of housing activities—housing finance, assisted housing, research and information transfer, and export promotion. CMHC is committed to helping Canadians access a wide choice of quality, affordable homes, and making vibrant and sustainable communities a reality across the country.

For further information, please contact:

Media Inquiries:
Christine Choury
Chief, Media and Associations Relations
(613) 742-5344

Public Inquiries:
1 800 668-2642


CMHC's Mortgage Loan Insurance Enhancements

Mortgage Loan Insurance:

Mortgage Loan Insurance (MLI) protects the lender against payment default by the homebuyer. Most financial institutions require it where the homebuyer has less than 25 per cent of the purchase price as a down payment. By providing MLI to lenders, CMHC enables home buyers to access mortgage financing with as little as five per cent down, at interest rates comparable to those financing the purchase of a home with a down payment of 25 per cent or more. The premium paid for MLI is based on the amount of the loan in relation to the value of the home. The cost of the premium is normally added to the mortgage balance.

CMHC mortgage insurance products have continued to meet the changing needs of Canadians. For example, some of the recent innovations announced by CMHC include:

  • Lowering CMHC mortgage loan insurance premium for the second time in two years. This includes a further 15 per cent premium reduction for a total of 30 per cent for first-time buyers with five per cent down and a full waiver of premiums for rental housing projects funded under the Federal Affordable Housing Initiatives which serve those in greatest need.

  • Recognizing the evolving lifestyle needs of Canadians who wish to purchase a second home as a result of career or family decisions by allowing qualified borrowers to use any of CMHC's existing homeowner products when they purchase or refinance a second home.

  • Helping meet Canada's climate change objectives and supporting healthy, sustainable communities by announcing a 10 per cent refund on CMHC's mortgage insurance premiums when a borrower buys or builds an energy-efficient home or makes energy-saving renovations (available since November 2004). To qualify for CMHC's premium refund, a home's energy efficiency must be rated using Natural Resources Canada (NRCan) EnerGuide for Houses rating system and meet certain minimum requirements. For new construction, and EnerGuide for New Houses energy advisor must rate the building plans before the home is built. A second rating, undertaken once the upgrading is complete, must show an increase of at least five points and a minimum overall rating of 40 to be eligible for CMHC's new Energy Efficiency premium refund. Homeowners who complete energy-saving renovations based on an EnerGuide for Houses evaluation could also be eligible for a grant from NRCan.

  • Changing the standards of the Residential Rehabilitation Assistance Program (RRAP) — a program aimed at helping low-income households repair their dwellings to minimum health and safety levels—to allow repair work to include energy-saving renovations and retrofits that will improve the energy performance of housing units assisted through the program.

The CMHC Mortgage Loan Insurance for Energy Efficient Homes is applicable to both owner-occupied and rental properties (apartment buildings, retirement and nursing homes) through participating financial institutions when a borrower obtains a new mortgage or refinances an existing one. CMHC's existing mortgage loan insurance products and policies are already contributing to promoting energy efficiency in homes.

The changes that are now introduced are built on a positive response from the housing industry since the program was first announced in November 2004. They encourage the development of more energy-efficient homes by making eligible a broader range of home building programs such as Built Green SocietyTMAlberta, NovoclimatMC, ENERGY STARR® and Power SmartTM.

News source: Canada Mortgage and Housing Corporation (CMHC)


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