What Is the Canada Mortgage and Housing Corporation (CMHC)?

The Canada Mortgage and Housing Corporation (CMHC) is a government department that acts as Canada's national housing agency. Its mandate is to help Canadians access affordable housing options.

Providing mortgage insurance to homebuyers is one of its main activities. In fact, it is so ubiquitous in this area that mortgage insurance is known as CMHC in Canada.

Key Takeaways

  • The CMHC provides mortgage insurance to keep loan costs affordable and enable first-time buyers.
  • The agency also provides services to Canadians in need of affordable and adequate housing.
  • It's 'green rebate' offers a 15% premium refund for buyers and builders of energy-efficient properties.

One in three Canadians receives some form of service from the CMHC while financing or purchasing a home. The corporation also conducts research on housing and real estate trends in Canada and globally, and provides the results to consumers, businesses, and other government divisions.

Understanding the CMHC

The CMHC was created in 1946 as the successor to the Wartime Housing Corporation and was known as the Central Mortgage and Housing Corporation until 1979. Its first mission was to help the nation's returning war veterans obtain housing.

As a federal crown corporation, CMHC is responsible for administering Canada’s National Housing Act and is accountable to Parliament through the Minister of Families, Children and Social Development.

Although CMHC is fully owned by the Canadian government and is based in Ottawa, it operates like a private-sector corporation, with a president reporting to an independent board of directors. The Canadian government appoints both its president and its directors.

CMHC Mortgage Insurance

CMHC’s mortgage loan insurance covers approved lenders, such as Canada's chartered banks, against borrower default. That provides approved borrowers with access to lower-cost mortgage rates. It also is a requirement when a home buyer makes a downpayment of less than 20%.

Since the National Housing Act and the Canada Mortgage and Housing Corporation Act were modified in 1999, CMHC has enabled approved buyers to purchase property with as little as a 5% downpayment, making a home purchase easier for first-time homebuyers.

CMHC provides services to Canadians in need of housing services, including Aboriginal and First Nations communities. In 2018 alone, 317,000 households gained access to adequate and affordable housing through the corporation's efforts, according to the corporation's annual report.

The 'green rebate' reimburses homeowners for some of the cost of improving energy efficiency.

CMHC is seen as contributing to the stability of the Canadian financial system and housing market. The agency also provides valuable financial information to consumers, housing professionals, mortgage financiers, real estate investors, and others interested in learning about the Canadian housing market.

Canada's Green Rebate

The corporation offers a 15% "green rebate" on homeowners' mortgage insurance premiums to borrowers who buy, build, or renovate energy-efficient homes.

CMHC also has undertaken Canada’s first National Housing Strategy, aimed at reducing chronic homelessness by 50% and improving the housing conditions of more than 500,000 families.