Record numbers of Canadian home buyers financed their way into home ownership in 2002, a trend that continues in many markets. The volume of Canadian residential mortgages increased 7.2 per cent in 2002, up from 4.2 per cent in 2001, according to Ali Manouchehri, Senior Economist with Canada Mortgage and Housing Corporation's (CMHC) Market Analysis Centre.

Low mortgage rates, robust employment and income growth, and weak equity markets are credited with fueling the remarkable performance of housing and mortgage markets in 2002, a trend many experts see continuing in 2003.

If you'd like to buy a house, condominium unit or townhome, but lack the up-front cash for the down payment, the federal government may be able to help you out. Our national housing agency, CMHC has pioneered mortgage insurance products and services that have helped finance more than one-third of Canadian homes.

The hardest part of buying a home — especially your first one — is usually saving the necessary down payment. By providing Mortgage Loan Insurance to lenders, CMHC enables you to finance up to 95% of the purchase price of a home. This means you can buy a property with as little as 5% down. So if the cost is $125,000, you would need a down payment of just $6,250!

If you have less than 25% of the purchase price to put down, you'll have to purchase mortgage insurance through your lender to finalize financing. Mortgage insurance protects your lender against payment default. If you, the borrower, fail to make mortgage payments (default on the mortgage), the lender is paid back by the insurer. (It should be noted that the protection provided to the lender by the insurer does not relieve the borrower of obligations under the mortgage contract.)

Without the risk of losing their money, lenders have the confidence to make mortgage loans up to 95% of the purchase price of the home. Depending on the location within Canada, maximum house price ceilings of $125,000 to $300,000 apply for 5% down payment. Ask your local mortgage lender for the maximum price ceiling that applies in your area. (Note: When the down payment is 10% or more, maximum price ceiling limits do not apply.)

How do you qualify for 5% down?

Published: May 6, 2003

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.